information builders insurance & insurance practice executive overview october 2011
TRANSCRIPT
Information Builders Insurance & Insurance Practice
Executive Overview
October 2011
Agenda
Marketplace Drivers
IB Vision for Insurance IB Solution Portfolio for Insurance How can IB help turn data into a lower combined ratio
Next Steps for Information Builders?
Copyright 2011, Information Builders. Slide 2
The Five Pillars
Challenge Operating Metrics Business Objective
The Tide is not Rising
Net New Policies Client Lifetime Value
Avoid attrition, protect client equity Cross-sell, optimize investments
Customer Behavior
Customer Satisfaction Retention Rate
Adjust to new buying criteria
Competitive Threats
Market Segment Share Unit Premiums
Leverage sources of differentiation Foster customer loyalty
Regulatory Changes
Processes Documented Compliance Cost
Rules change revenue, cost drivers Explosion of redesigns
Risk Management
Exception to Policy Open Audit Points
Manage high stakes risks more robustly
Copyright 2007, Information Builders. Slide 4
Changing Appetite for Insurance ITBusiness Priorities Business Analytics is #2
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Changing Appetite for Insurance IT2011 IT Project Priorities
Disruptive insurers driving market changeInformation key to a profitable insurer
“In this third entry in the Journey series, we single out IT as the fourth foundational pillar in recognition of it fundamental role in helping companies differentiate themselves and win in the marketplace”
McKinsey & Co Journey III: The Next Frontier in P&C Insurance (2010)
“Information is the key product generated by Insurance organizations seeking sustainable competitive advantage.”
Mark Gorman Insurance Principal, Tower Group (2010)
Enhancing Business Performance along the Analytic Journey
IntelligenceInformationData
Predictive Analytics
Diagnostics
Dashboard
Cleansed Data
What happened?
How many, how often, where?
Where exactly is the problem?
What needs attention?
Why is this happening?
What if these trends continue?
What will happen next?
What’s the best that can happen?
StandardReports
Ad HocReports
Query DrillDown
Alerts
StatisticalAnalysis
Forecasting
Optimization
Business
Impact
&
Competitive
Advantage
IntelligenceInformationData
PredictiveModelling
High
What ‘s the best that can happen?
Low
Copyright (c) 2011 Fractal Analytics
Preconfigured Insurance Data Base
IB Solution Portfolio for Insurance
Copyright 2009, Information Builders. Slide 8
Insured Experience
Distribution & Underwriting
RiskManagement
Finance & Operations
Single View of the Business
Dashboard Analytics Reporting Mobile Search Visualization
Integration of Systems, Data & Data Quality
Strategy &Roadmap
IB Solution Portfolio for InsuranceInsured Experience
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Insured Experience
Delivery of Customer
Experience
Customer Intelligence
Predictive: Customer Life Time Value
Predictive Analytics Inventory
Lifecycle Marketing
Acquisitions
Segmentation
Campaign Optimization
Up-sell
Customer Lifetime Value
Cross-sell
Loyalty & Retention
Revenue Enhancement
Consumer Behavior
Risk Management
Underwriting
Credit Scoring
Behavior Scoring
Bankruptcy
Collections/Recovery
Pre-Payment
Risk-Based Pricing
Loss Forecasting
Portfolio Valuation
Stress Testing
Value/Dollars at-Risk
Segmentation
Compliance Validations
IB Solution Portfolio for InsuranceDistribution & Underwriting
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Distribution & Underwriting
Distribution Commissions
Underwriting& Marketing
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Predictive: Expected Agency Profitability
In Action: IPF Distribution KPI
IB Solution Portfolio for InsuranceRisk Management
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Risk Management
Pricing Reserving
ERM
Claims Fraud
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Predictive: Risk Inspection Price Impact Forecaster
In Action: IPF Key Risk ObjectivesIPF Claims Stratification
IB Solution Portfolio for InsuranceFinance & Operations
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In Action: IPF Insurance Dashboard
Finance & Operations
FinancePerformance
Expense Mgmt
Operations
IT Regulatory
HR
IB Solution Portfolio for InsuranceSingle View of the Business
In Action: Dashboards Strategy Map
3 Insurers Speak: Webinar
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IB Solution Portfolio for InsurancePreconfigured Insurance Data Base
In Action: Executive KPI mart
Session: Structuring Insurance Data to make more money
• Business Driven• High Skills• Short• Independent
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IB Solution Portfolio for InsuranceStrategic Roadmap for Business Analytics
Michigan
Risk Management
Predictive Example: Customer Life Time Value (CLTV)
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CLTV is an essential tool that helps business developstrategies to extract incremental value from their customer
Components of CLTV
CLTV
Future Cross-Sell
Expected Profits
Current Revenue
Life Expectancy
CLTV isn’t just to measure your
customer’s value but to enhance it
CLTV isn’t just to measure your
customer’s value but to enhance it
17 Confidential | Copyright © Fractal 2009
Brand Consideration
Moment of Purchase
Develop Relationship
Deepen Relationship
Return customer
TM
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Why does agency scorecard matter? 18
Confidential | Copyright © Fractal 2009
All agents
Agents with high loss ratios
Bad agents with high loss
ratios
Good agents with high loss
ratios
Agents with low loss ratios
Bad agents with low loss
ratios
Good agents with low loss
ratios
• Simplistic approach can penalize unlucky good agents and reward lucky bad agents• This can be avoided by using the agency scorecard• Bad agents can be selectively penalized and good agents can be selectively rewarded• This results in healthy growth of the book
Normal approach
Agency segmentation
Do nothing
Return Distribution
Copyright 2011, Information Builders. Slide 19Return Distribution
TM
Confidential | Copyright © Fractal 2009
Determined the Strategy to Reduce MVR Expense by ~30% with least impact C.R. Impact
Conduct a cost benefit analysis and identify to Savings from Motor Vehicle Record( MVR) ordering
• Implemented MVR model that enable client reduce MVR budget by 30%
• Achieved expected % benefit. $ benefit lower due to slow-down in economy
The Challenge
The Results
ORDEREDNOT ORDERED
-$10
$0
$10
$20
$30
$40
$50
$60
$70
1 2 3 4 5 6 7 8 9 10Deciles of Cost Benefit
Realized
$
Predicted
BENEFIT OF MVR ORDERING
$1.5
$0.7
$0.2$2.4
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
Predicted Drop in volume Mix Shift Actual
Expected and Actual Savings from MVR Ordering Program (in $MM)
$MM
20Return Risk
TM
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Price Impact Forecaster
Inability to Forecast
Have to wait for 3- 6 months to measure impact of price change
Cannot adjust monthly sales target a-priori to factor in price change
Cannot avoid intentionally writing business at lower margins to meet revenue goals
Today’s Pricing Process has 3 main GAPS
Our product plugs these gaps and goes beyond cost plus pricing
• Measures customer Risk
• Helps in segmenting customers based on risk attributes
• Measures customers’ reaction to price changes
• Helps realize different profit margins depending on price sensitivity
• Index for Customer Loyalty
PRICE SENSITIVITY
Loyalty
LOSS MODELINGCost of doing
businessNEXT GEN
PRICING
LIFETIME VALUE
Loyalty
Inability to iterate
Cannot determine the best scenario out of the100+ price change available scenarios
Product Head, Actuaries & Sales have different recommendation on what will work. Who is right?
Suboptimal operations Mgmt
Cannot avoid spending a lot of time in pricing decision due to the subjectivity involved
Results in spending less time managing field operations / sales force / customer needs
21Return Risk
Areas of Risk
Rolled up Risk indicators
Risk Event Alerts
Favorites Graph
Drill to analysis
Drill to Cause/Effect
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Overall Risk Strategy
Drill to KRIs, Plans or Aligned Process
White ellipse is Consequence
Return Risk
Processes aligned with specific Risk
Return Risk
`
25Return Risk
Evolve Loss Development with a click. Right now.
26Return Risk
Insurance Dashboard to drive your business strategy
27Return 1 View