Insurance Networking News - November/December 2011

use of data also brings more consistent internal processes across the organization, which leads to better protection of a carrier’s brand and position in the market.

Internalizing External Data for Analytics

specific areas of the insurance workflow is really becoming a thing of the past; we see a developing best practice where carriers are implementing a holistic, proactive analytics approach across the organization and throughout the workflow. The result is an improved lifecycle: one that is cost- and time-efficient, effectively minimizes risk and fraud loss opportunities, creates consistency, improves process workflows and enhances customer service.

15 minutes with

Bill Madison

To fully exploit business analytics, carriers must supplement their internal policy-level data with a variety of data points derived from external sources. To get a sense of how insurers can best harmonize exogenous data with existing business processes, Insurance Networking News checked in with Bill Madison, SVP insurance data solutions for Lexis/Nexis.

INN: What technologies need to be in place for insurers to apply these sources of data for analytics?

BM: Today’s modern systems offer easy integration of both internal and external data for analytics. Some technology solution providers are able to offer “actionable” data and analytics across most platforms—internally and externally built. Actionable data means we can take a number of data attributes across many different sources and deliver it in a fashion that can be easily integrated (i.e., scoring) into any platform.

Today we are in a position to take “big data” down to a level of granularity that enables easier execution into any technology platform. Platforms should enable the integration of predictive modeling, data request, data pre-fill, identity matching and better use of public records data. We are seeing more benefits and interest in relationship analytics for underwriting and gauging fraud.

As told to
Bill Kenealy
INN: How can insurers better
incorporate advanced cus-
tomer data into operations?
BM: While insurers currently
have access to and often use
customer data, e.g., public
records, they use it reactively,
assessing risk in underwriting
processes or paying potential-
ly fraudulent claims. Insurers
need a proactive data analy-
tics approach applied to their
operations, taking full advan-
tage of multiple data sources
and analytics engines from
underwriting to claims as well
as life and other markets.

INN: Should insurers target certain areas of the enterprise for new initiatives or is a more holistic approach preferable?

BM: If insurers are using proactive analytics in other parts of their businesses, e.g., underwriting, we recommend expanding to develop a holistic analytics program, a dynamic, data-driven approach of continually evaluating risk as more information about the risk becomes available.

To reap the full benefits, carriers must supplement their internal policy-level data with a host of external data. Using external data only in

INN: How can underwriting data be leveraged for claims management?

BM: A deeper understanding of consumer data used by underwriters helps determine risk, which can then be used to make decisions about the best way to triage claims. Some of the same internal data utilized to help validate consumer information and underwrite their policies can and should be used for claims management to again assess risk and determine the best process for each claim. Using this available data helps insurers more efficiently address their claims with a consistent discipline, automating processes from the beginning.

Underwriters use data to better understand risks in particular households, which should also be used in claims management to better understand both the history and the new, changing dynamics of households.

We’ve made great advancements in understanding and knowing more about the customer, whether business or consumer; commercial or personal, but there’s a tremendous road ahead. Insurers must take advantage of this knowledge to assess risk because the future leads to insurers making money through better underwriting and reduction in claims.