Information Management in the Insurance Industry

Insurance companies have even more need to manage enterprise information since they face rigorous regulation and complex, information-rich value chains. Information management is central to their competitiveness and license to operate, and yet many insurers lack adequate insight to operate as high performers. What is needed is an approach to business intelligence (BI) that takes into account the challenges of the insurance industry.

Many insurers have yet to expand their business intelligence much beyond conventional compliance-reporting systems. A complex legacy system environment and the industry's history of mergers and acquisitions have been stumbling blocks. Tools designed for the silos of individual business units have slowed enterprise-wide analytics.

While business intelligence in insurance faces many limitations, the demands placed on it are increasingly complex and urgent. On the regulatory front, the AM Best rating assessment now includes a category for exposure accumulation practices, the Spitzer allegations have resulted in a global push for increased transparency and Sarbanes-Oxley brings implications for decision accountability and risk management. Landmark events such as 9/11, Hurricane Katrina and Enron have sparked demand for greater precision in the industry's location intelligence and analysis of loss trends. And, more generally, all customers have rising expectations of their insurers in terms of product availability and the ease of doing business.

At the same time, insurers are experiencing increased pressure to grow market share without sacrificing profitability. Sophisticated pricing models driven by predictive analytics are gaining traction. The emergence of fresh capital in the industry—such as the new Bermuda-based

Accenture's industry experience shows that effective management of information in insurance is especially critical in terms of four core business drivers:

• Customer Insight/Satisfaction—Winning insurance businesses attract and retain the best customers by using analytics to create differentiated products tailored to specific customer types.
  
  
• Operational Performance—By instituting team productivity monitoring and real-time analysis of the submission flow, insurers can better understand the achievement of service level agreements (SLAs) and key operational metrics, such as hit ratios and customer retention.
  
  
• Risk and Compliance Insight—Sophisticated document management tools and processes improve document storage, auditability and traceability.
  
  
• Financial Performance—Access to accurate, timely global financial data supports true cash flow-based planning and detailed "what-if?" modeling.

Leading insurers need a framework for turning data into true intelligence. In this framework, underwriting, product and claim performance analytics rely on consistent methods of defining, retrieving and cleansing data across disparate systems. This data then feeds into executive dashboards and drill-down reporting tools, as well as data extraction and dynamic scenario modeling by the underwriting, policy and claims systems.

In Accenture's experience, a business intelligence framework of this type can result in direct and measurable improvement. The specific benefits include reduced loss costs and operating expenses. Real-time product and geographic analytics enable more focused growth strategies for gaining market share. Monitoring service, SLAs and customer retention can lead to improved customer experience.

Insurers continue to face business intelligence challenges. This gap between current BI capabilities and aspirations is common across industries, according to Accenture's 2007 survey of CIOs. Our experience shows that this gap can be bridged to a great extent through timely data access and robust analytical capabilities. As insurers strive to achieve high performance, their operational and financial data is one of the most powerful tools they possess. World-class business intelligence enables them to apply it to maximum effect.