Data, I confess, has never struck me as particularly exciting. Oh, if you work for Reuters or Bloomberg, you should pay close attention, because that’s the business you’re in. Otherwise, though, it’s just a bunch of numbers streaming through the organization to feed the applications where the important work is done.
Stick me in enough conferences where themes appear and reappear, and I can eventually be persuaded that a dry topic – data – might deserve more attention. Several years ago when I was writing a lot about profitability, experts in the area kept talking about the importance of good clean data. All the analytics to determine whether a customer was profitable depended on acquiring transaction data – along with information about which channels were used for transactions. Oh, and if you want to use the information for customer relationship management, you better make sure to include other data, such as household and small business information, so you don’t cut off a guy who appears to be overextended on his boat payments at one branch while his wife is running a multi-million dollar business through another.
ACORD, which can go on at some length about standards in the insurance industry, is now becoming equally insistent on the topic of data. That shouldn’t be too surprising for an industry body that started life designing paper forms to meet state regulatory requirements and provide an efficient way for agents to send applications to carriers. Moving with the times, ACORD took its standards into the electronic world years ago and now it is at the core of efforts to make electronic commerce efficient for the insurance industry.
As you can read in our cover story on the globalization of insurance, data is getting attention now. The agent down the block writing coverage on houses around the neighborhood, or brokers handling large commercial accounts at multiple sites, are just the beginning of information flows that go up the chain to carriers and on to reinsurers or securitized packages of risk that can be sold to investors.
For the market to work, participants have to know what is in those policies, and they have to know in an efficient way. Carriers want underwriting processes that can be at least partly standardized and automated. This would not simply reduce costs, but also give them a consistent view of risk and reward across the firm, so they can determine how to allocate capital. For global companies, this requires consistent descriptions and underwriting rules from Green Bay in Wisconsin, to Lyon in France, to Kyoto in Japan. Sure, there will be differences in types of property and coverage, and in regulatory requirements. But if a global carrier wants to decide where to expand business, it needs to understand its returns.
Data is just as important in compliance, where executives signing their lives away are going to demand systems that permit drill-down from rolled-up results to detailed information. I’ll be back with more on data and links to resources for more information in our first newsletter, Windows in Financial Services eNews. You can subscribe to the newsletter and this magazine (if you aren’t already on our mailing list) by going to http://www.windowsfs.com/financialsubscription.asp.
And by the way, you may have missed it in the holiday rush, but the December 20/27 issue of InformationWeek ran this note in its year-end wrap-up of industry trends:
Overrated Money Saver: Open Source Software
Underrated Money Saver: Commercial Software
“Compare Red Hat Inc’s mid-tier standard price for Linux with tech support ($799) to a roughly comparable Windows Server 2003 license from Microsoft ($999) and you begin to see how the numbers really crunch…Yankee Group analyst Laura DiDio reports that in-demand Linux system admins can command salaries 20 percent to 30 percent higher than Windows staffers.”
www.informationweek.com