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Data modernization: The key to tomorrow’s highly competitive insurance industry

One question haunts every CXO: “How can we make our company and products better for the customer?” The answer, today, is straightforward. Data is what makes and breaks organizations. Data allows organizations to look back with surgical precision on their past actions and allows them to look forward with confidence to remodel the business in near-runtime. For the insurance industry, data has extraordinary significance. “It allows us to tailor services for customers instead of having a set of products you try and sell,” says Paul Johnson, CIO, and COO of PIB Group (an ITC Infotech customer), which is a dynamic and diversified specialist insurance intermediary that provides bespoke solutions for personal and business customers. Johnson is mindful of the fact that in a service-oriented environment, data provides the means to know the customer accurately and improve customer experience, boosts organizational efficiency, meets compliance requirements, and understands how markets may be shifting. Despite the upside, why is selling a modern data vision to the Board so difficult?

The reason Boards are wary of CIOs pushing ambitious data agendas is that they are never shown reasonable ROI. In the experience of leaders who have driven successful data modernization programs, the board needs to see two outcomes of data modernization:

ROI—which is not necessarily in terms of monetary impact—is possible in three years. For most insurance companies, legacy databases are, by nature, reporting systems. Boards need to be sensitized to the fact that modernizing data is preferable to overspending on a reporting database as the investment helps shape business strategy through insights. Data modernization must be seen strategically.

Quick wins that allow the board to buy into the data modernization journey. This then allows the organization to do all the other exciting things it can to make business better, including revenue uplift, improve operational efficiency, and ways to serve customers in different and more personalized ways for more effective upsell and cross-sell.

Five key shifts make investments in data modernization an industry imperative:

  • Direct, digital, and embedded sales will become dominant channels for growth, which directly enables cross-sell and upsell insurance
  • The subscription revolution will see insurance deeply woven into consumers’ everyday life
  • Ecosystems will expand as the cloud and new connections enable radical innovation
  • Real-time risk visibility and responsiveness will become a reality. Huge savings due to faster processing and elimination of fraudulent transactions
  • AI adoption will accelerate change

A simple scenario helps contextualizes the shifts. Imagine a customer asking for motor insurance. The right way to tailor the insurance is to seek data on car usage and build an AI-driven risk profile of the customer. Based on this, insurance is offered in a subscription model to fit customer needs.

While there are several challenges to modernizing data related to scalable architecture and questions around trust, security, and governance, all can be solved by leveraging an intelligent cloud. But it pays to pay close attention to Johnson’s words of wisdom that come from experience: Don’t bite off more than you can chew—don’t promise the world, promise what you can deliver; get IT and business to collaborate so that a business understanding drives data modernization; and don’t rush it—if you do, you’ll make mistakes.

Insurance organizations have always understood the value of data. It allows them to build risk models which are the bedrock of business. Now, they need to harness internal and external data and use it in real-time to improve customer experience, raise organizational efficiency, and meet complex regulatory requirements.

Author:

Karthik R

Vice President, Digital Experience

ITC Infotech

Views: 302

Tags: Data, Insurance, Modernization, digital, dsc_cxo, dsc_finance, efficiency, journey

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