SAS®9 empowers Codan, a leading Scandinavian insurer, to cut costs and improve profitability

SAS software provides Codan with fast access to up-to-date business, customer and market intelligence – and is helping to improve service and reduce costs in a competitive marketplace.

Customer Success Video

Check out this video to learn more about Codan Group and its successes with SAS.

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Customer ViewPoint
You have questions; our customers have answers. Check out this video Q&A.

Jan Parner
Chief Analyst          
Codan Group

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Codan is one of Scandinavia's most successful insurance companies, with annual revenues of approximately DKK 19.3 billion (€2.6 billion, US$3.3 billion). Denmark's third-largest insurer, it is a publicly listed company with 72 percent of its shares owned by the UK's Royal & SunAlliance. With the sale of its life and pensions business in 2004, the business is now firmly focused on general insurance products such as auto, household and accident coverage. Codan scores high in customer satisfaction and loyalty; understandably, the group wants to maintain this reputation while also controlling costs.

Codan has been using SAS to support its business for 20 years; in 1987 it launched its first data warehouse and, in 2004, took its evolution to the next level with SAS®9. "We've got one of the best data warehouses in Denmark," says Johan Agerman, Chief Information Officer, Codan. "Now with SAS we are working on getting the information out to the real decision makers. Our relationship with SAS is very good – we need a partner that comes up with good ideas, not just a sales pitch."

To build profits, Agerman says Codan has to select the "right customers and the right risks and price them correctly." Prior to implementing SAS®9, the business relied on IT experts to comb through 200 data sources to pull out information and deliver it to employees working on applications, pricing and claims. This could take up to two days but, as Agerman says, the marketplace no longer tolerates such a time lag. "In Sweden, Internet sales and Internet claim settlements are becoming more popular, and we are seeing the same development in Denmark. It's key to have the right data at the right time. If we can give a customer an answer quicker, we have a business advantage, a competitive advantage." In short, faster answers provided by SAS mean better business for Codan.

Leading the way
Codan's SAS data warehouse supports a range of core activities. These include insurance accounting, customer profitability analysis and scoring, campaign analysis, sales reporting, product reporting and ad hoc analytics and reporting. In fact, the company uses SAP financial management and human resource software complemented by a wide range of SAS solutions. "SAP is a very strict system," explains Jørgen Falkesgaard, Project Manager in Codan's IT Competence Department. "It ensures data is stored correctly and locked when users access it. SAS is not so strict, and enables you to get a better overview. We combine data from the SAP system with data from other sources. SAS enables us to enrich the SAP data with other information – that's where the benefit lies." However, with demand rising within the business to make analysis even more powerful and easy-to-use while also cutting costs, it was time to move to the next level. Codan's requirements were strict, covering issues such as easy access for all users, confidence in data integrity, archiving and backups, improved performance, results-oriented reporting and, above all, security and stability.

Moving forward in partnership with SAS
Since Codan had been using SAS successfully for years, Falkesgaard and his team realized it would be the best route to achieve enhanced data management, better data quality, more powerful analytics and a host of other improvements. They were convinced the ideal solution was an upgrade from SAS 8 to SAS®9. Indeed, Codan identified the benefits as including improved stability and manageability of better-quality data, reduced development time for applications, easier system maintenance and improved staff productivity. To enable this enhancement, a top-down commitment from senior managers was critical. At this point, the SAS team became involved, working closely with Codan to show how SAS®9 could revolutionize data management, and save money.

A process began in February 2003 to analyze the existing use of SAS solutions and to explore the new capabilities SAS®9 could add. In July 2003, Codan became an early adopter. A full range of SAS software was then installed on the NT servers: SAS Enterprise Guide joined SAS on PC clients; SAS ETL Studio and Management Console replaced SAS Warehouse Administrator; and analysis and applications were moved from MVS to the servers. By January 2004 the MVS system was being upgraded to SAS®9 and user training had started. Testing also began on portal and reporting products.

Throughout, SAS people focused on the vital task of communicating how Codan's capabilities would be transformed once the transition was complete. Falkesgaard stresses how important this communication was in winning management buy-in, summing up the core values that characterized SAS' involvement as "truth, trust and teamwork." In July 2004 the new SAS environment was up and running and the transition was smooth. "Technology-wise, we didn't have any problems worth mentioning," says Falkesgaard, "and we didn't have any problems at all with the SAS solutions." In just two years, the server environment will have recouped all costs associated with the move in saved MIPS alone. For Codan, however, the business advantages and cost savings provided by SAS®9 are the most important benefits.

The benefits are clear
With SAS®9, data and information became readily available on each employee's desktop. With minimal training, people could become self-sufficient by leveraging information in their daily decisions – analysts determining pricing and claims, for example – while insights for senior executives supported strategic decision making. As Falkesgaard explains, "People soon discovered that the changes we had made brought them benefits in their work through improved analysis and reporting." SAS®9 interfaces were tailored to varying skill levels and usage patterns, making it even easier for the widest range of employees to access and use essential information to help them excel in their day-to-day business.

Falkesgaard adds, "Because SAS®9 is built on industry standards, we could integrate the business intelligence environment with our production systems and insurance systems. Customer-facing employees have access to all the information our analysts can retrieve from the data warehouse, and we route that information directly back to our Web systems." The new approach provides the basis for improved marketing and customer retention campaigns. "We're very interested in customer profitability – 'customer scoring' – and that's the main type of information we started routing back," says Falkesgaard. "We're now moving toward marketing automation."

Business analytics in action
Like most businesses, Codan needs to understand where, when and how to deploy resources for the best returns. But the insurance sector faces a unique set of challenges. For example, reduced income from property portfolios and falling reserves have made it more difficult to cover losses from fraud and rising claims. Companies must also fine-tune their profitability through better cross- and up-selling, improved customer retention and more accurate pricing. A key success factor is the ability to accurately segment the market and then price according to individual customer risk, a practice known as "individual risk pricing". This enables Codan to get closer to its customers by capturing all of their attributes that describe potential risk.

"We aim to reveal hidden customer information and then translate that into, for example, reduced IT spending at an operational level," says Jan Parner, chief analyst in Codan's Personal Insurance Division and head of its Business Intelligence Department. "We use all the tools in SAS – it's an integrated part of what we do. If you want to run a campaign you use knowledge from us. If you want to identify who in the sales force is going to address a particular customer segment, you get the information from us. If you want to set prices, you use our knowledge. The insights we provide control how the sales force is used, what type of customers we address - and it's all at a micro level, almost down to individual customers. It's highly segmented and highly accurate. We aim to inspire our people to turn their normal decision-making style into management by knowledge."

The team uses SAS to seek out opportunities buried in vast quantities of data and so support decision making at all levels. This covers important areas such as customer behaviour and profitability, as well as determining risk premiums and pricing levels. "Picking the right customers is the difference between making and losing money," says Parner. "You need to understand which customers to retain and which you can let go to competitors who are beating your price. If you have good risk discrimination and therefore highly segmented pricing, you can go below your competitors on price, if necessary, for the good segments. We're also constantly looking for opportunities to cross- and up-sell."

By providing Codan with more powerful data management and analytical capabilities, SAS®9 is enabling the business to accurately assess and constantly update its customer intelligence, transforming this into actionable knowledge. The ultimate outcome is a healthier bottom line.

Better business intelligence
"We have the right tools to dig into the real business issues," says Parner. "If we had problems with the infrastructure – if we couldn't access data, if we didn't have SAS to bring our data to life – it would be a major hassle. Instead, we can focus on the real intellectual problems and not worry about the infrastructure." He says this solid SAS 9.1 architecture is what makes savings possible at Codan, as it enables his team to effectively examine strategic business issues and drive change at every level. "SAS gives us the ability to focus on the real issues – that's how it saves us money."

He adds, "Typical management requests come as one-liners such as 'Can you predict the future profitability of customers?', 'Can you improve risk pricing?' and 'Can you detect more fraud?'. We sketch something out, sell the idea to executives and start developing things. Part of our job is to sell the benefits of knowledge. We might say to a sales manager that we'd like to look at the information in her line, using it to achieve an improved hit rate, to provide more business for insurance agents and enable better profitability performance. A pilot proves the case and she's convinced. It's all about being one step ahead, having more knowledge than your competitors.

"Customers benefit, too. If you speed up the process of revealing customer information, you can focus on the insurance proposition instead of customer behaviour. If you can't perform analysis in a reasonable time you'll never get to the customer proposition. Speeding up the entire process with SAS means we can offer better products, improved service and a better proposition." Return on investment generated by this business intelligence team has been so strong that Codan has established a similar group in its commercial line.

More insights, delivered faster
Summarizing the strengths of SAS®9, Falkesgaard says: "With SAS 8 you solved one problem at a time. Different technologies were used and various skills were needed in business intelligence. With SAS®9 there is a very strong technological foundation – all the solutions are built on this foundation and that makes a huge difference." With its move to SAS®9, Codan has streamlined and boosted its analysis capabilities, with efficiency gains having a significant impact on the bottom line. In short, SAS has enabled Codan to realize its twin strategic goals of reducing costs and improving analytical capabilities. As Falkesgaard concludes, "We've had years of successful experience with SAS and the new versions build upon this."

Jan Parner adds, "SAS is a partner for Codan, not just a company that sells us software. Over the last two years I think we've been getting closer and closer. SAS helps us to solve the problems we face – we like to think of it as a win-win partnership."

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