30 Oct 2015
Trick or Treat… It’s Dirty Data
Don’t be scared to open the door for Dirty Data. However my advice would be to open one door at a time, and open them cautiously…
Before you run in the other direction when Dirty Data comes knocking, let’s take a look under the mask. Maybe it’s not quite so scary. Google defines Dirty Data as “… a database record that contains errors. Dirty Data can be caused by a number of factors including duplicate records, incomplete or outdated data, and the improper parsing of record fields from disparate systems.” That is a mouthful, so instead let’s try to understand who Dirty Data is. Maybe he just needs a hug, and a bath.
“Dirty” data translates into poor quality data and poor quality data is something to be feared since it can negatively impact your business’ reputation, but it’s possible to conquer. Granted, there’s typically a lot of it, but in order to take control, you should first attempt to compartmentalize it into what you need it to do for you and your business. Define what your businesses objective is when it comes to cleaning the data you use. What unclean, inconsistent data causes the most pain, and by cleansing it would unlock the most business value; immediate and long- term? Let’s use an example. Say your CEO sends down a message that she’s tired of hearing about complaints from multi-line policyholders that every time they contact the customer service help desk you have to repeat and often times correct the customer information you have on record for them, and she wants something done about it ASAP. Based on this, I’d say the clear business objective is to assess the customer data across business lines to identify, triage and develop a plan to treat data inconsistencies, inaccuracies and replications, which should yield the following business value:
- Improved customer satisfaction and retention by reducing/eliminating customer data inconsistencies and inaccuracies across business lines, thereby building trust and loyalty.
- Provide cleansed, consolidated and accurate customer data across business lines to promote
- cross-selling opportunities for agents
- actuarial risk modeling
- data analytics trending
To put this approach into motion, I’d suggest taking these steps:
- Identify how many customer/contact databases your business lines are using. This will help frame the scope of what you’re facing.
- Assess the pain. What are the most common issues with the customer/contact data across departments, and which issues cause the most pain? This step will help you to prioritize what data points to focus on.
- Develop a game plan for addressing the issues identified in Step 2. Your plan could involve varying degrees of some or all of the below:
- manual or automated data scrubbing
- data entry and usage verification rules
- user training
- Establish a data governance unit. You can set up a team or other means to oversee cleanup plans and progress, and ensure ongoing adherence to data standards.
Data cleanup certainly sounds like a daunting task, and truthfully, it will most likely mean rolling up your sleeves and putting some elbow grease into dealing with it, but in the long run, it will be worth it.
Who’s afraid of Dirty Data? Not me.
24 Apr 2015
Is your company ready for Smart Data?
Data in the P&C space has been used for years to help insurers properly assess risk and set premiums. However, the way in which P&C companies are collecting data is changing. For example, Progressive now offers discounts for people that allow telematics to collect data on their driving habits. But what about the Life companies?
John Hancock recently announced a program utilizing the Fitbit to help policyholders earn credits for active lifestyle. While this is an appealing sales tool, it is unclear whether this data will be useful in predicting risk or longevity. Consider a person who walks 50,000 steps per day and someone who walks 10,000 steps a day. What if those 50,000 steps were associated with a steep hike up a mountain vs 10,000 steps around the block in a quiet neighborhood? This is just one scenario that might have insurers questioning how to use Smart Data. It’s too early to tell how significant it will be, but it is catching people’s attention.
Insurers are starting with trusted sources of data, but as more and more experience is gained, nontraditional data will start to be utilized, positioning it to be a game changer. Think of Amazon and how they use data to suggest other products based on your browsing and buying patterns. Perhaps buying patterns at grocery stores or restaurants will help insurers assess an individual’s risk level and premium amounts.
Even with all of this buzz around Smart Data, experts have begun to warn companies that they need to use caution when collecting data, and drawing conclusions based on it. Sticking with our grocery example, what if the prospective policy holder made those purchases for an elderly parent instead of themselves? Relying too heavily on lifestyle data such as this could create false conclusions, thus affecting the premium quoted to the policyholder. Incorrect assumptions could hamper sales, damage a company’s reputation, or even cause lawsuits.
There is a considerable hype around Smart Data, but companies need to know how to use it and be willing to experiment. Insurers should start asking themselves these questions and conducting the tests whether they are industry leaders or fast followers. Data is going to continue to play a very big part in the insurance game. The collection of the right data and its interpretation will be the key factor in determining success.
So, what does this mean for you? Your company will need a strategy to support the new wave of data technology, including:
- Data sources
- Validation and accuracy
- Utilization, interpretation and modeling.
Without this, your company will have a hard time unlocking the real power of burgeoning data types. Start thinking about how to handle future data categories now so you are ready to collect and use them effectively when they arrive.
Cyber-risk and Data Security: Business Risks Need IT Solutions
Cyber-crimes include a wide variety of activities:
- Unauthorized data access
- Corruption of data
We live in a data-driven society, and no matter what your business operations are, you have cyber and data security risks. Attacks are on the rise; 2012 and 2013 saw big brand names like Target, Neiman Marcus, American Express, Visa, Citibank and Barclays dealing with significant breaches. In 2014, cybercrime definitely makes the Top 10 list of business risks that IT needs to plan for and mitigate.
Financial services and insurance companies are not immune to these attacks. IT departments are hard pressed to ensure that their companies’ data and systems are secure. Cyber-attacks are costly to consumers and companies. In fact, studies show that about 70 percent of customers would leave a company following a data breach. So how will your IT strategy defend your data and keep you cyber-secure? We agree with Benjamin Franklin, “An ounce of prevention is worth a pound of cure,” so we offer 3 bytes (pun intended) of advice when creating, maintaining and updating your IT strategy:
- Design technology to support business processes, not the other way around. Develop an “Enterprise Data Topology” or something similar. A data topology provides a complete view of data by following and mapping the data through the enterprise to explain its relationship to the business and how that data is supported in an organization’s systems.
- The devil is in the data details: Know your data, understand how data flows, and manage your data well. The increasing need for automation and cloud storage adds risk and small holes in your data flows, which can turn into costly and large issues. If you are not governing your data, start today. Data Governance is an emerging discipline that refers to the overall management of the availability, usability, integrity and security of the data employed in an enterprise. Proper Data Governance provides consistency of data and business rules, increases speed-to-market, facilitates flexibility in product design, reduces costs and risks and ensures transparency of processes.
- To defend your data against attack, you need to be aware of the gaps and risks, big and small. Be realistic in this assessment and ask for help when needed, you will lose a lot more than data if a hacker finds your holes before you do.
At NEOS, we think a proactive approach to cyber risk is the only way to ensure security. Identify and close the gaps by sustaining direction, tracking progress and knowing when to seek outside assistance with your data management and/or overall IT strategy.
If you want to learn about the 4 additional IT risks NEOS practitioners have noticed affecting the insurance industry, download our whitepaper – Insurance IT Risks That Need to Stay at the Top of Your Business Agenda.
Observations at the Life Insurance Conference
With a theme like Stop Tweaking, Start Recalibrating!, you could assume that the 2014 Life Insurance Conference would have sessions indicating that the life insurance industry has some changes to make. The conference did not disappoint with its ability to match session topics to its theme. Many sessions provided valuable information and statistics that insurers can use to adapt to changing consumer demand and perceptions of the industry.
Life insurance companies as a whole struggle to adapt to changing consumer behaviors namely to the distribution shift toward seller beware mentality. Many insurance companies are still heavily relying on agents to sell policies, as they should, since the channel still holds a large share of sales specifically for higher value policies. However, insurance companies need to adapt to changing consumer behavior by offering a more diverse portfolio of sales channels.
As we all know in the last 10 years how we buy products and services has shifted with the introduction of social media on mobile apps. What we may not be aware of is our changing preferences to how we do business. Many who have done research into the matter on how insurance is purchased are learning that consumers want to go into a sales situation with all the information they can, mainly found on the internet, creating a seller beware mentality. The days of agents providing all the information to a potential customer and guiding them through the process are gone, instead replaced by consumers who are approaching agents with background knowledge and targeted questions.
The conference sessions stressed that the insurers who are embracing the change and adopting new sales methods are going to be more successful and less at risk. Risk of disrupters entering the industry, which is slow to change, has companies becoming afraid of their inability to adopt new technologies and alter their sales strategy to life insurance being bought, no longer sold.
Overall, attendees left the conference with the knowledge of how consumer trends are changing and the perspectives of insurance executives who are at the forefront of innovation.
Observations at the Retirement Industry Conference
The retirement industry conference had a similar theme as the life insurance conference held directly prior. The same sales shift was again a prominent theme with the difference being how it would directly influence the retirement industry and sales of retirement products. Highlighting and identifying how the millennial generation would fair when faced with saving for retirement based on their generation’s characteristics and spending history was a key differentiator.
What was unique at the Retirement Industry Conference was the importance of financial education to the industry. Many sessions highlighted the need for companies to increase transparency and build trust with the consumer. One method of relationship management is providing educational services beyond what brokers have provided in the past with product education. By educating potential clients at an early age, the importance of saving is conveyed and understood.
Prior financial knowledge will ultimately lead to product sales through financial planners and the desire to financially plan. One speaker even made the distinction between two ways companies use educational programs. She stressed that companies could adopt financial literacy programs in order to compete with others who already offer the service or could take the program beyond what others provide to increase their competitive advantage. Either way on some level, financial literacy programs are becoming necessary to the retirement industry and those companies operating within.[/vc_column_text][/vc_column][/vc_row]
23 Mar 2014
4 Steps to the Right KPIs
Too often, organizations prematurely embrace what they think is the right list of KPIs. They spend a great deal of time and money extracting data, building database and dashboards, only to realize that the effort does not produce the expected results. Management should take the time to focus on what metrics to use and why. The result provides the foundation for success going forward. Taking the time to understand problems thoroughly, to appreciate why metrics are important to monitor, and to comprehend how this insight will contribute to efforts to change and address poor results is key to creating a useful and productive dashboard.
Management should plan to focus on four areas as they build the list of KPIs: problems, critical paths, drivers and competitors.
- Problems: First and probably most important, ask what is the problem we are trying to solve? Managers may be able to identify the problem, but not really understand what it is. Take the time to define all aspects to gain a thorough understanding. Otherwise, determining the proper KPIs may be a waste of time.
- Critical Paths: Next, look at your business critical paths. What is critical to running your business? Refine this thought process further by clarifying what information is critical to running your business successfully. Management should encourage this activity by brainstorming around more specific questions such as “Is it more than just the financials or forecasting?” Taking the time to dig as deep as possible through this initiative is time well spent. Failing to align the critical path and the problem you have identified can result in inaccurate goals and wasted time.
- Drivers: Organizations must understand business drivers for the continued success and growth of the company. Yet, while the question is simple, “What are the main drivers of your business?” the answers are not as straightforward. Management may say that close ratios, net cash flow, revenues, turnover rate and customer satisfaction are the primary drivers, but the key to understanding those examples is identifying what processes and data roll up into those drivers. Again, time spent in analysis here means time and effort saved in the end.
- Competitors: Lastly, competitive exploration can be helpful. What are your competitors measuring as best as you can gather? Further, what measures are critical to them and why? This data can guide companies to areas they might not have otherwise considered.
The next exercise in building the list of KPIs is to further analyze why these metrics are important. For example, brainstorm and discuss why each metric is critical, why measuring it will contribute to achieving business goals and why it will provide insight into what needs to be adjusted.[/vc_column_text][/vc_column][/vc_row]
Keep on Track with Key Performance Indicators – KPI Identification
“One of the overarching problems that caused performance management efforts to fail in 2013 was corporations’ lack of focus,” according to Senior Strategy Consultant, Brian Harris. The two major ways companies lack focus is by either tracking the incorrect number of metrics (too many or too few) or simply collecting the wrong metrics.
While the number of Key Performance Indicators (KPIs) varies depending on the size and industry of the company, most global corporations track between 12 and 20 metrics. Using this range as a guideline helps eliminate wasting time and financial resources spent on gathering too many metrics, while providing enough information to analyze the performance of the organization or initiative at hand. The number of KPIs may adjust slightly as your program develops and modernizes over time.
Management should focus on the metrics that best encourage the desired behaviors they want to see when prioritizing KPIs. When corporations derail from their overall business strategy, it becomes unclear exactly how the organization is performing. The predictability quality of a KPI depends on how well a corporation’s strategy is aligned to the metrics the performance indicator is trying to measure.
Once your KPIs are in place, take the selected vital few KPIs aligned with the strategy and benchmark performance against the industry to set targets. These targets should be visible to all levels of the organization to create accountability. When targets are transparent, staff members are able to compare their departmental and personal progress with corporate exceptions.
Following these precautions and best practices will help identify bottlenecks to ensure your performance stays on track. To learn Brian Harris’s 4 other KPI common mistakes, watch his webcast on “Top 5 Performance Management Pitfalls”.[/vc_column_text][/vc_column][/vc_row]