Majesco Insurance Blog

Where is the Real Home for Analytics?

Jun 18, 2015 | By: | Topic(s): Data Strategy, Digital Strategy, Explosion of New Data, Group & Worksite Benefits, L&A, P&C

One of the more fascinating aspects of technology consulting is having the opportunity to see how different organizations address the same issues in similar or different ways. These days, analytics is a superb example of this. Even though every organization needs analytics, they are not all coming to the same conclusions about where ‘Analytics Central’ lies within the company’s structure. In some carriers, Marketing picked up the baton first. In others, Actuaries have naturally been involved and still are. In a few cases, data science started in IT, with data managers and analytical types offering their services to the company as an internal partner, modeled after most other IT services.

In several situations that we’ve seen, there is no Analytics Central at all. A decentralized view of analytics has grown up in the void — so that every area needing analytics fends for itself. There are a host of reasons this becomes impractical, so often we find these organizations seeking assistance in developing an enterprise plan for data and analytics. This plan accounts for more than just technology modernization and nearly always requires some fresh sketches on the org chart.

Whichever situation may represent the analytics picture in your company, it’s important to note that no matter where analytics begins or where it currently resides, that location isn’t always where it is going to end up.

Ten years ago, if you had asked any Senior Executive where data analytics would reside within the organization, he or she would likely have said, “Actuarial.” Actuaries are, after all, the original insurance analytics experts and providers. Operational reporting, statistical modeling, mortality on the life side, and pricing and loss development on the P&C side — all of these functions are the lifeblood that keep insurers profitable with the proper level of risk and the correct assumptions for new business. Why wouldn’t actuaries also be the ones to carry the new data analytics forward with the right assumptions and the proper use of data?

Yet, I was invited to speak at a big data and analytics conference with over a hundred insurance executives and interested parties recently and I was slightly surprised when there was not one actuary in attendance. I don’t know why, maybe it was because it was quarter-end, but I can only assume that even though actuaries may want to be involved, their day jobs get in the way.  Quarterly reserve reviews, important loss development analysis and price adequacy studies can consume more time than actuaries have already.  In many organizations the actuarial teams are stretched so thin they simply don’t have the bandwidth to participate in modeling efforts with unclear benefits.

Then there is Marketing. One could argue that Marketing has the most to gain from housing the new corps of data scientists. If one looks at analytics from an organizational/financial perspective, Marketing ROI could be the fuel for funding the new tools and resources that will grow top line premium. Marketing also makes sense from a cultural perspective. It is the one area of the insurance organization that is already used to blending the creative with the analytical, understanding the value of testing methods and messages and even the ancillary need to provide feedback visually.

The list of possibilities can go on and on. One could make a case for placing analytics in the Business, keeping it under IT, employing an out-of-house partner solution, etc. There are many good reasons for all of these, but I suspect that most Analytics functions will end up in a structure all their own and that’s where we’ll begin Where is the Real Home for Analytics, Part II in two weeks.

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