Shivani Patel Data, Technology, digital...
Data. What are people doing with it? And who’s responsibility is it?
I have been posed these questions a number of times in the past 12 months by clients at all levels, as people start to follow and react to the digitalisation within the insurance market. The insurance industry of 2016 is a very different landscape to that of any previous year. The abundance of available capital has paved the way for M&A deals resulting in fewer but larger companies. Moreover these increased capital reserves, helped by recent low volumes of catastrophes, have fuelled an appetite for underwriting more risks, and have seen premiums falling across the board (with the exception of IPT increases). Amid this changing landscape, one constant question remains; how do we market a quality product at a competitive price? This is where information (or data) comes in play.
The responsibility for data has traditionally sat with IT, including its collection, storage and governance (a recent concept adopted over the past few years) whilst the interpretation and manipulation of it has been assigned to MI/BI teams within the “business side” or technology arm of a company. The terms MI and BI are closely interlinked. The former relates to what is or has happened and the latter what can and will happen based on past events and external market drivers. In my experience business users have seen MI as the responsibility of operations or business teams and BI as an unsavoury term that sat with technology and its creation led by development professionals.
Here is where we’re seeing the driver for change. As businesses have grown and seen the tangible benefits of using data and the information it creates, teams have been formed in multiple areas of the business leading to different and disjointed approaches or “rogue operators” as one senior individual put it to me. Some businesses have in excess of six different MI teams within one London office, all generating similar reports but using different technologies (at great expense) and no doubt rendering some unused at certain periods of the month.
The result has been a recent surge in the recruitment of data, management information and business intelligence professionals across the London market. Businesses have seen the value of data and the decisions it can help leaders make - everything from lead to sales conversions, underwriter/broker performance, business line profitability and, importantly, trends within claims that can lead to better pricing and underwriting decisions. Technology has aided this with the release of tools outside of the traditional Microsoft BI stack such as Tableau, QlikView and Hadoop.
With all of these developments in technology and with business knowledge improving all the time, the question remains, who should own data? Many say it is the responsibility of IT, and CIOs and Heads of IT across the industry have sometimes been reticent to relinquish their control. But talking to leaders across the market I have found a growing consensus on the matter that will certainly challenge the status quo within businesses across the Square Mile:
- The ownership of data and reporting should sit within the “business” of a company. The data is used by underwriters, brokers, actuaries and operational leaders to make strategic and sales decisions, therefore they should own it
- Responsibility for the collection and storage of data should rest with IT. The strategy for its gathering and the tools that are best served to do this will be known by data professionals but the installation and maintenance of these tools and the systems that provide them with the data are best run by technology professionals.
With these points being agreed by a number of practitioners and commentators, there is also consensus that a new role is emerging within businesses, the Chief Data Officer (CDO) or Head of. This position does not report into the CIO but is an operational position with direct links into the business that they are providing the information to. Of course, who the CDO reports into is another question - is their reporting line the Chief Operating Officer? Chief Underwriting/Broking Officer? Chief Executive?
There may be no simple answer to that but we are starting to see insurance companies moving in this direction How many will follow, time will tell. One thing that we know for sure is that other industries such as Banking, Marketing, Retail and Energy have moved this way and are reaping the benefits. Can the insurance industry afford to be left behind?
If you would like to discuss this topic in more detail, please contact Jon Sharpe of Venquis at firstname.lastname@example.org