“Big Data” and “Predictive Analytics” are dominant buzz words in the workers’ compensation insurance industry. Yet, they have been marketed as a competitive differentiator by carriers and third-party administrators (TPAs) for as long as I can remember, or at least for the last 20 years. So, what has changed?
Loss results? Not really, experts tell us loss results have not improved much over the last 20 years.
Operational efficiencies? You would expect improved operational efficiencies, but expense ratios indicate otherwise.
Technology? IT has improved significantly, advancing tools and skills that allow:
- An easier process of mining data from legacy systems;
- The Storing data that is more readily organized and accessible;
- A more meaningful visual presentation of the data in dashboards that lays the out story. Making it easier to interpret trends and highlighting areas of concern.
- New technology positions such as Chief Data Officers, Data Scientists, Data Architects, Data Engineers are now commonly found in many insurance organizations today.
At the end of the day, the evolution in the data management world does not matter unless a company has a data-driven culture turning these advancements into improved efficiencies and lowering total claim costs.
One of my favorite quotes attributed to Thomas Edison is “vision, without execution, is hallucination”. Big Data and predictive analytics should be an important component of the strategy that supports the vision. But data in the hands of a company that is not data-centric and does not have a data driven culture can’t expect to improve their own performance, much less improve the results for its clients. The missing link here is execution. Data should be the foundation for historical benchmarking, goal setting and performance monitoring. Data should identify hot spots that need further investigation and action by those accountable (loss control, underwriting and claims) for achieving company and client goals. When everyone in a company embraces and regularly monitors individual, team, company and client goals and is held accountable for results, execution is elevated. Results improve and we move closer to realizing the vision. The evolution of Big Data and Predictive Analytics has the potential to redefine and improve industry performance, but only if we pay attention to what the data is telling us and use it to elevate our own execution of the basic fundamentals of our business. Big Data and Predictive Analytics are only as good as the culture they live in.
