June 29, 2017

There has been a lot of discussion in insurance about insurtech, models and technology recently. But much less discussion around the specific work routines, breaking down the data silos and the cultural changes necessary to make a success of digitisation.

It is accepted that analytics, and what is loosely called artificial intelligence, are increasingly having an impact on business. But so much of the important work necessary is what goes on before, and after the actual analytics work, for example with readiness, listening and questioning, finding the right contacts in the business and deciding the key metrics.

There is recognition in the last few years that analytics deserves a place at the top table of business with rising numbers of Chief Data Officers in the corporate world.

As we look around, in insurance and in all types of services, data is becoming increasingly ingrained in every aspect of business. Companies are seeing what consumers are doing on devices, and how they’re behaving in the connected world, and then engineering their processes backwards to meet these trends.

A recent meeting for London Tech Week brought together Stefan Maczkowski head of data strategy at Aviva, Nathan Linkon Senior Manager-Strategic Insights at PepsiCo and Anthea DeSyllas former head of solutions at consumer science company Dunnhumby.

There was agreement in the discussions that the historical sources of competitive advantage in business – such as brands, cost-based strategies and broad customer concepts – are decreasing to the point where they no longer apply. Technology and digital are increasingly framing the ‘how’ and the ‘why’ of everything, from product design to service delivery to promotions to loyalty.

A recent report from Boston Consulting Group said that the digital world has already entered the second part of the ‘chessboard’. Competitive advantage now demands a constant process of transformation.

As Nathan Linkon said in the London Tech Week meeting: “The winners are going to have just two sources of competitive advantage: the ability to learn about customers quickly, and then to turn that knowledge into actions quickly….To do this there needs to be a top down and bottom up influence on business.

“Data scientists love going out and solving complex problems, but there needs to be guidance, with the right level of granularity that the business demands,” he added. “We have a rule in Pepsico that a piece of work has to be understandable in about five seconds. If it isn’t, we break it down into smaller iterations, whatever is the minimum message to make that message tell a clear story.”

Towards the single customer view

At LexisNexis Risk Solutions our insurer clients are expressing similar views about becoming more agile in terms of processes and deployments.

There is an urgency around developing systems that are fit for the future, and ready for the faster deployment iterations that the future will demand. More and more insurers are looking to better understand their customers and their behaviour across different insurance lines with data-linking technology.

If the goal with data is to be able to influence consumers and to be responsive to consumers, in insurance we know there is a drive to move to a much more analytics-style of working. This means the whole technology infrastructure needs to look beyond just the existing risk structures and traditional business silos, towards looking at the whole customer.

Insurance companies can acquire silos and unhelpful business cultures from many sources: acquisitions of distinct businesses with different cultures and tech platforms, or simply from human behaviour which is inherently emotional, self-absorbed and difficult to change. Other types of silos can emerge because of organisational structures and lack of clarity around data and business goals.

Silos are about people and organisations, not just data silos

As Aviva’s Stefan Maczkowski said in the meeting: “If you can tackle the data silos, then you can unlock other types of silos in the business…It is also important to understand where the data surfaces and presents itself to the consumer, which can be as many as 500 places with a large enterprise.”

In terms of getting actionable insights out of data, there are some common areas of blockage felt by insurers. These include budget constraints (which in theory are the easiest to overcome), getting support from senior management, data security issues, and data integration challenges, getting information out of data silos to where it’s needed (which is often the hardest to solve).

recent survey by Celent found the biggest obstacles to innovation for insurance companies are a lack of appropriate structures (such as staffing and tools), a tendency to focus on short term ROI in technology investment, as well as cultural factors.

Stefan Maczkowski said that for Aviva, the work being done for GDPR has been very positive and it has forced the business to get to grips with all the places where data resides.

“For me it has been a really positive experience. It helps us to get a clear view and gives us a compelling reason to break silos…In terms of organisation changes, we are on a journey. But there is a lot of political capital now, in the conversations when talking about data.

“I spend a lot of time meeting people in the business and building relationships over cups of tea. Silos are not just a faceless part of the organisation, they are about people. We have set off on a journey at Aviva, which is about exploring and innovating. We don’t want to just come up with a solution and start fitting it in everywhere.”

Follow the link to the LexisNexis Risk Solutions website to find out more about how we support insurance providers.