Making better decisions at the heart of the business
Improving data quality to strengthen decision making around underwriting, reinsurance and risk selection
Ecclesiastical uses SAS® to improve data quality to make better decisions that enhance the reputation of the business, affect millions of pounds of risk selection/underwriting and help to establish optimum reinsurance levels.
Millions of pounds hang on decisions around reinsurance and risk selection. Achieving the best possible outcome means taking data and turning it into ‘decision-making gold’. The key is to have good data going into the process.
Nigel Light, Business Intelligence Analyst at Ecclesiastical Insurance, comments: “We’ve been improving our data assets so that we can make better decisions and further enhance our reputation as a safe pair of hands. The data-quality project also saves us money and contributes towards us being data compliant for regulatory purposes as well – these are clearly great benefits to have on top.”
Addressing data quality head on
"Our pilot area was UK General Insurance claims, where our aim was to monitor and improve the quality of data captured by the claims department," Light says. "An initial data profiling exercise, supported by conversations with both downstream data consumers and the claims department themselves, helped to identify existing data issues."Based on these findings, business rules were constructed within the design environment of the SAS solution, which, for example, enabled the insurer to automatically identify potentially duplicate claims and any invalid postcode data captured on the system. Other common errors addressed included inaccurate claim event dates and mismatches of cause codes when compared to the claims narratives entered by claims staff. Cases identified were flagged for manual investigation and resolution."
Establishing data governance processes
SAS allows Ecclesiastical's business rules to be run on both an individual claim and data set level. The results are stored in a secure repository and then written to an internally developed dashboard, used by the organization to monitor data quality performance metrics and case identification within a day of each entry being captured on the system.
A data steward, working within the business unit, oversees the dashboard to monitor levels of data quality and rectify issues on a continuous basis. These insights give local management the ability to work with the BI team to amend or adjust business rules and, over time, continually improve the data asset.
It also provides valuable evidence as to the effectiveness of the company's data governance approach, which can be provided to regulators. A trend indicator details the occurrence of each business trigger, which lets Ecclesiastical monitor the effectiveness of actions taken to rectify the root cause of any issue.
"We started small, with just a few simple rules," Light explains. "But the opportunities are huge, and we have already expanded our base to include our euro operation based in Ireland and our ANSVAR subsidiary too. With the flexibility of the SAS solution for both business rule design and execution, we have a solution that will not only ensure our compliance with the Solvency II directive, but that puts us in a strong position to provide better customer service and internally improve business operational practices."
In the next stage of the data governance program, Ecclesiastical plans to embed data quality into its corporate culture through a data quality framework, including an enterprisewide dashboard and a process to feed data issues into the internal workflow system.
Reduced costs and better decisions
Implementation of the SAS solution is a major step toward Solvency II compliance. Yet it has also led to a host of other business benefits, which the BI department believes will demonstrate the effectiveness of the program to the executive board in purely commercial terms.
More accurate and complete data should lead to a direct reduction in the cost of claims "leakage," that is, where avoidable costs for settling a claim have been incurred. By improving risk location data, there is an opportunity to reduce the cost of reinsurance purchase. Furthermore, by supplying more accurate and complete data that details the risks that Ecclesiastical covers, risk selection can be improved.
"There are, of course, some benefits which are more intangible and harder to quantify," Light explains. "But we believe these include better decision making, particularly in the areas of risk selection, forecasting, pricing and claims reserving due to data improvements on which decisions are based, as well as improved customer service and industry reputation through the use of more accurate data across our customer touch points."
Complying with regulations: Solvency II
One of the key regulations that Ecclesiastical faced was Solvency II. Nigel Light explains: “Solvency II regulation requires a data-quality improvement platform to be in place and effective in time for the January 2016 deadline. This requires a major effort from everyone involved in order to meet this time frame. At the same time, we also saw the opportunity to make significant improvements in claims, risk and underwriting off the back of this project, so we rolled out the data-quality project across the UK and Irish business."
We started small, with just a few simple rules for compliance, but the opportunities are huge. We saw the chance to make business improvements in claims, underwriting and policy handling, so we’re rolling out analytics across the business.
Business Intelligence Analyst, Ecclesiastical Insurance
Business improvement built on platform of data quality
Ecclesiastical realised in 2012 that it needed to embark on a data-improvement program. Better information would help the company forecast more accurately and assess risk more thoroughly.
"We started by working with UK General Insurance claims to monitor the quality of data captured by the claims department,” says Light. “The data-profiling exercise helped to identify errors at their source – either through technical updates or training. This is where SAS was instrumental because it was able to quickly find the problems."
By having more accurate claims data for a number of business processes, Ecclesiastical was able to rely more on its data to make better and faster decisions. It further enhanced its decision making by adding to its internal data with external sources: for example, publically available information on schools from the Department for Education. Using fuzzy matching techniques, Ecclesiastical supplements its own data to help its risk selection when evaluating new policies.
Light continues: "We need to have accurate information around risk management and forecasting. Our underwriters make critical decisions based on this information. As a company we select risk, and purchase our reinsurance cover based on the data in our systems. Bad information coming in leads to bad decisions; good data coming in gives us decision-making gold."
Ecclesiastical benefited from working with SAS and tapping into its wealth of experience and industry-standard processes, frameworks and systems. Adopting business-defined rules helped make improvements within underwriting. The opportunity to identify and correct policy issues, with respect to reinsurance and risk, now exists – and the correction of policy data ties into new business and renewal cycles in underwriting. This has a significant financial impact on the business, both in terms of top- and bottom-line performance.
Establishing data methodology and governance processes
The project was not just about finding and fixing problems: it was also geared towards creating a more efficient business culture that could sustain the data analytics driven approach.
Light adds: "Working with SAS we developed a methodology around our data to ensure its ongoing quality. We capture, prioritise and manage issues as a first step. Then we analyse the impact of many different factors, as well as the root causes. Once mitigated, the outcome is better, more accurate business decisions that impact our overall performance."
The SAS® Data Management Platform allows Ecclesiastical’s business rules to be run at both an individual claim/policy risk and a dataset level. The results are displayed on a Cognos dashboard that gives managers, risk assessors and underwriters improved data to make better decisions. Moreover, it helps the Ecclesiastical-appointed data steward to monitor data-quality performance metrics. This ensures that the immediate gains from data quality and analytics are fully sustainable over time.
"These insights let our management team amend or adjust business rules over time to continually improve our data assets and put us at the forefront of the insurance industry. They also provide valuable evidence as to the effectiveness of the company’s data-governance approach, which ensures punctual compliance with the Solvency II directive. It’s a win-win situation," Light continues.
Implement a data-governance programme to ensure compliance with regulations including Solvency II, and extend the benefits of data analytics into policy underwriting, claims management and customer service.
Foundation for compliance with Solvency II data-management mandate, reduced costs related to claims ‘leakage’ and reinsurance purchase, as well as improved customer service and better decision making.