Some Scary Points About Insurers and Their Data

The 12-year-old kid in me loves The Simpsons and one of my favorite quotes, issued by Homer,  is easily adaptable to the insurance industry and what we all like to call “the data problem.”

The line, as adapted by yours truly is as follows: “Data, the source of—and answer to—all of an insurance carrier's problems.”

Those who recognize the line know that Homer was referring to beer, but Homer never worked for an insurance carrier that, say, had a data warehouse that was virtually inoperable because the data itself was of such poor quality.

There are any number of issues why an insurance carrier struggles with its data. For more insight on this issue you can listen to an archived webinar put on last week by PropertyCasualty360.com.

How do you know if your data is of poor quality? There are multiple answers to that question, but for one, just ask yourself this question: Do you have the ability to answer strategic questions about your customers?

Ideally, insurers should have that ability. After all, what is your data other than information about your customers? If you are unable to take that data and manipulate it into reasonable shape so you can quickly detect—or even better—anticipate the needs of your customers for additional coverage, you are not getting the most out of your data.

Consultant Bill Jenkins, who previously served as CIO at Penn National believes insurers often lack two things when looking to improve their data: employees in IT that have the right skills to clean and manipulate the data, and a champion within the executive offices who will push through such a program.

The scariest point of Jenkins' presentation in the webinar, though, was that through his discussions with nearly 50 insurance carriers in recent years, most of them had the belief that a company's data is the responsibility of IT.

Surely IT needs to be involved in all data projects, but what is IT going to do with data? We should all know the answer to that question, but apparently we don't.

I thought we had already reached the point where we realized there is no such thing as an IT project anymore. Any projects undertaken by an insurance carrier that involve technology are business projects because if there is no business case for it—and no one championing the issue—there will never be enough business benefits for a sustainable return on investment.

There are enough success stories around for us to know that a properly organized data project can do wonderful things for insurers such as improve customer service and improve sales—particularly with existing customers. Are those two areas where you would like to see an improvement within your organization? We thought so.