PDFs, email, images, voice, and other unstructured types of data continue to flow in, out, and around insurance companies and they are multiplying at a dizzying pace. A startling quantity of electronic data, estimated to be more than 1 zettabyte was generated in 2010—the equivalent of 1 billion terabytes.

Now, the really alarming part—the amount of electronic data in the world is expected to increase at a 60 percent compound annual growth rate through 2020. This means that the quantity of information stored in the world in 2020 will be 100 times more than the amount stored in 2010. And as mind-boggling as these numbers are, the estimates may be conservative. The explosion of social media and the trillions of devices and sensors being connected to the Internet will generate increasing amounts of data.

There's no question data sits squarely at the heart of the future of information technology. In a way, it is "back-to-the-future" because in the early days of computing, it was all about data processing.

The insurance business, with its established track record as a data-based industry, will feel the impact of these massive amounts of data more than many other businesses. The challenge will be not only to capture the data, but also to cleanse it, store it, and integrate it to work effectively in concert with other internal and external data.

The insurance industry has solid experience in managing high volumes of business transactions. But most of the information insurers now need to handle and manage is not the structured, transactional data that has long been stored in traditional databases. The bulk of the data is now unstructured—document images, e-mail, digitized voice conversations, PDFs, SMS text messages, pictures, videos, and a variety of social media content.

Just how well are insurers doing at capturing, storing, managing, analyzing, and capitalizing on this unstructured information? The answer may provide a crystal clear lens into how successful insurers can be in the next decade.

Over the last 12 months, Strategy Meets Action has conducted a series of research studies and interviews to gain insight into how insurers are managing information content and leveraging it for competitive advantage. This research, based on survey responses from over 500 insurance industry participants and in-depth interviews with dozens of insurance leaders, probes four key areas:

• Information: What do the increasingly varied types of information mean for insurers?

• Capabilities: What current capabilities do insurers have for managing this content? What new capabilities will be needed to create competitive differentiation?

• Spending and Solutions: Why are insurers investing in IT capabilities for enterprise content management? How much is being spent? How well are solution provider offerings addressing the needs of insurers?

• SMA Call to Action: What steps should insurers be taking to improve their capabilities for managing documents and information content? 

The following is a summary of these four areas:

Information

What do the increasingly varied types of information mean for insurers?

It's easy to see that the types of information insurers need to manage are changing over time. An array of communication options—human-based, computer-based, and telephony-based—is flooding our world with new types of information. Each of these information types is relevant for insurers and can impact productivity, profitability, and service levels. The information represents communications with customers, prospects, business partners, governmental agencies, and other third parties.

The days of dealing with only pre-defined data elements and formats are gone. Insurers must be able to accept and manage data as it comes in no matter what source or style.

Capabilities

What capabilities do insurers have for managing this content? What new capabilities will be needed to create differentiation?

When defining required capabilities, it is essential to look at how business and technology capabilities are synchronized and aligned. The SMA Maturity Model depicts a pathway for three levels: Mainstreamers, Movers, and Masters.

Mainstreamers have baseline capabilities for automation and efficiency. They have automated capabilities to capture and store all manner of unstructured data. SMA research shows that 81 percent of insurer survey participants indicated that they have these capabilities today, while only 19 percent do not capture this type of information. Most insurers have content management software with a repository to store and manage this information, and a majority of those indicate that they have multiple content management systems in place.

Movers want to stay one step ahead of mainstreamers, one step behind the masters, or have plans in place to become a master. Movers practice active management of their content—moving beyond just capturing and storing the data. According to SMA survey data, 48 percent of insurers state they either do not capture information beyond the basic transaction data, or they capture document images and other content but are not leveraging it. 

Masters are the market leaders in adopting business and technology capabilities to create differentiation. Masters have fully integrated their content management systems across the enterprise and have achieved tight integration with customer correspondence and communications systems. Few insurers have achieved this level, but many have this vision on the drawing board for their future content and communications management systems.

SMA has developed Maturity Models for business functional areas such as distribution, underwriting, and claims, as well as content and communications management. Insurers are finding these models to be of real value in assessing their current position relative to peer groups, and assisting with the development of a roadmap to position them where they want to be in the future.

Spending and Solutions

Why are insurers investing in IT capabilities for enterprise content management? How much is being spent? How well are solution provider offerings addressing the needs of insurers?

Many insurers have invested significant dollars and resource in imaging, document management, and enterprise content management (ECM) over the last decade. In the past, the primary objectives have been to reduce costs, improve processing efficiencies, and decrease the floor space required for storage. As a result, many insurers believe they have advanced capabilities for content management.

But today, the explosion of information content, increasing customer demands, and the competitive marketplace are requiring continued investmrnt in this area. New investments are more heavily focused on driving top-line growth. The SMA insurer survey received high response rates from business users, and highlighted customer service, customer understanding, and retention as the top three drivers for IT investment in content and communications management.

Across North America, significant dollars are being spent on capturing, managing, and storing of content. In 2011, SMA estimates that insurers are spending $3.4B, about 15 percent of the IT budget. This spending includes software, maintenance, hardware and staffing. P&C insurers have historically outspent life & annuity insurers, but recent SMA research shows more aggressive spending plans for l&a companies through 2013.

Over the last 10 years, insurers have invested in operational efficiency and the reduction of the amount of paper folders, resulting in large scale scanning and imaging operations. Now, in an effort to assist in the automation of decision making, insurers are leveraging the content in areas such as underwriting and claims processing.

There are no shortages of solution and technology offerings in the marketplace. Over 80 IT solution providers are selling solutions to insurers for enterprise content management. These offerings include specialized technology, such as image capture devices, e-signature solutions, or voice technology, as well as solutions that create a hub for all document and content management.

SMA Call to Action

What steps should insurers take to improve their capabilities for managing documents and information content?

SMA recommends insurers take proactive steps to better understand their enterprise content management capabilities and find optimal ways to improve them.

• The critical first step is to align technology strategies for content management to business strategies, identifying the specific business capabilities that will be needed to support the current and future business strategy. Content management plans should be part of an enterprise-wide strategy for improving the customer experience across all departments and touch points.

• The next step is to examine all existing paper flows, looking for opportunities to improve the associated business processes, and investigating ways to offer customers new options for interaction.

• Next, take an inventory of current content management solutions and the related IT infrastructure underpinnings. This helps to determine whether or not current IT capabilities can be extended, or if new solutions must be installed. If new solutions must be acquired/built/installed, a thorough evaluation of IT providers with ECM systems will need to be launched.

• Finally, use a roadmap to give meaning and cohesion to the new opportunities, required capabilities, and planned solutions.

So, how well are insurers managing information? From some vantage points, insurers manage information quite well, especially for high volume business transactions in the traditional computing environment.

Insurers have been aggressive in imaging, forms management, and document management systems for more than a decade, as well. However, there are significant opportunities for improvement regarding unstructured content. All those PDFs, e-mail, tweets and other unstructured content should be managed and mined—providing insurers that seize the opportunity with increased productivity, customer loyalty, and profitability.

About the Author

Mark Breading, a partner at SMA, is a recognized expert in advanced technologies and their implications for the insurance industry. Mark can be reached at mbreading @strategymeetsaction.com.