Vincent Oliva, Managing Vice President, Gartner Research

Welcome to our annual insurance forum Vincent. What separated the successes from the failures last year in integrating data and improving straight-through processing?

“Smart insurers will keep a careful eye on profitability, and employ technologies that will strengthen the underwriting process, such as business intelligence and advanced analytics.”

There were several factors, but the top two that come to mind are culture and lack of a strategic data architecture and management plan. Many insurers still operate in product or geography silos. The profitable ones do not want to be adversely affected by those that are not, so a “That is my data, you can’t have it” philosophy comes into play. Unless the silos are broken down, and a holistic approach to data management and use is taken, progress will continue to be hampered. Many insurers also are investing in technology and not using it to its fullest. When employing new technologies, end users need to be brought into the loop early. If the attempt to change the culture is made after the arrival of the technology, there will be resistance, and failures will result. On the data architecture side, insurers have been buying and building applications for several years. The data needed to run these applications is in many cases housed in the applications, creating data redundancy and data cleanliness issues. Building a logical data model first, then layering on the necessary applications, will minimize this.

What are some of the critical next steps for 2008?

2008 will be a difficult year, as the overall insurance market continues to be soft. Critical next steps will involve maintaining underwriting discipline, and not being dragged into the competitive foray just to save the top line. Smart insurers will keep a careful eye on profitability, and employ technologies that will strengthen the underwriting process, such as business intelligence and advanced analytics. Automated, exception-based underwriting and fully connecting the claims supply chain also will be critical next steps.

What are some of the more exciting advancements you see becoming available?

More advanced business intelligence and analytics tools, using GPS for “black box” real-time underwriting for auto insurance, revamping of business processes and advanced BPM tools, ERM tools and dashboards, product configuration and development tools, and advanced customer analytics.

What is the one message you would leave with insurance companies?

From a business perspective, stay the course. Don’t sacrifice profitability for growth, and become much more customer-centric. From a technology perspective, develop a data architecture and management plan that reduces redundancy and concentrates on business value.