Applied Insurance Analytics

Description

Insurers: use analytics to drive far more value from your most important asset — data!

Today, many insurers radically underutilize their data, leaving them vulnerable to traditional and non-traditional competitors alike. Now, drawing on 25 years of industry experience, Patricia Saporito shows how to systematically leverage analytics to improve business performance and customer satisfaction throughout any insurance business.

Applied Insurance Analytics

demonstrates how to use analytics to systematically improve operations ranging from underwriting and risk management to claims. Even more important: it will help you drive more value everywhere by defining a focused enterprise-wide analytics strategy, and overcoming the challenges that stand in your way.

Saporito helps you assess your current analytics maturity, choose the new applications that offer the most value, and master best practices from throughout the industry and beyond. Throughout, she helps you gain more value from data assets, technologies and tools you’ve already invested in. You’ll find new case studies, practical tools, and easy templates for improving the “Analytics IQ” of your entire enterprise.

For every insurance industry professional and manager concerned with analytics, including users, IT pros, sales/marketing specialists, and data scientists. This book will also be valuable to students in any MBA or other program focused on insurance or risk management, and to many students in IT or analytics-specific programs.

Most insurers fail to fully exploit their greatest asset: data. Why? Because their use of analytics is largely limited to stovepiped operational areas such as underwriting, claims, marketing, or risk management. To unleash the value buried in your data, you need an analytics strategy that is enterprise-wide, business driven, and performance-focused.

In this book, industry thought leader Patricia L. Saporito explains why such a strategy is so important–and how to plan, implement, and profit from yours. Drawing on 25+ years of insurance experience, she presents a complete framework for customizing an analytics strategy based on your business model, capabilities, and goals.

Saporito reviews common analytic applications by functional area, offering specific use cases and examples and helping you build on the analytics you’re already doing. She presents insurance-specific data and governance models for effectively organizing and integrating your data, ensuring its quality and privacy and maximizing the value it creates. Finally, she provides tools and frameworks for improving the “analytic IQ” of your entire organization, from business users to IT developers.

• Crafting your optimal analytics strategy and execution framework
Defining needs, prioritizing initiatives, and organizing for success
• Deepening skills, transforming culture
Building the truly analytics-driven, performance-based organization
• Selecting and applying insurance-specific analytics metrics
Making the most of KPIs, leading indicators, and correlation metrics
• Choosing the right tools for the right jobs
Selecting tools for reporting, visualizing, and predicting

“Finally… a data analytics roadmap for insurance industry decision makers–not just research, but applied research to our industry.”
–John A. Cherba, Past President, Society of Insurance Research

“As we move into a time with big data and cognitive computing, we are very fortunate as an industry to have thought leadership that brings front and center–as Pat has discussed in her book–topics that we must incorporate and look to as points of reference and, most importantly, lessons learned. Great reference materials and perspectives!”
–Cindy Maike, Associate Partner, Insurance, Global Business Services, IBM

“In her book, Pat connects the dots between business challenges and analytics capabilities in the insurance industry and provides a roadmap on how to optimize analytics in practice.”
– Dwight McNeill, Professor and Author of A Framework for Applying Analytics in Healthcare: What Can Be Learned from the Best Practices in Retail, Banking, Politics, and Sports

Today, many insurers radically underutilize their data, leaving them vulnerable to traditional and non-traditional competitors alike. In Applied Insurance Analytics, industry thought leader Patricia L. Saporito helps you change that by leveraging analytics to improve business performance and customer satisfaction throughout your business.

Saporito shows how to use analytics to systematically improve operations ranging from underwriting and risk management to claims. Through use cases, case studies, tools, and templates, you’ll learn how to assess where you stand, choose new applications that offer the greatest value, gain more value from existing investments, and master best practices from throughout the industry and beyond.

Data is the insurance industry’s single greatest asset. Yet many insurers radically underutilize their data assets, and are failing to fully leverage modern analytics. This makes them vulnerable to traditional and non-traditional competitors alike. Today, insurers largely apply analytics in important but stovepiped operational areas like underwriting, claims, marketing and risk management. By and large, they lack an enterprise analytic strategy — or, if they have one, it is merely an architectural blueprint, inadequately business-driven or strategically aligned.

Now, writing specifically for insurance industry professionals and leaders, Patricia Saporito uncovers immense new opportunities for driving competitive advantage from analytics — and shows how to overcome the obstacles that stand in your way. Drawing on 25+ years of insurance industry experience, Saporito introduces proven best practices for developing, maturing, and profiting from your analytic capabilities.

This user-friendly handbook advocates an enterprise strategy approach to analytics, presenting a common framework you can quickly adapt based on your unique business model and current capabilities. Saporito reviews common analytic applications by functional area, offering specific case studies and examples, and helping you build upon the analytics you’re already doing. She presents data governance models and models proven to help you organize and deliver trusted data far more effectively. Finally, she provides tools and frameworks for improving the “analytic IQ” of your entire enterprise, from IT developers to business users.

Patricia L. Saporito is a senior director for SAP’s Global Center of Excellence for BI and Analytics. She is SAP’s thought leader for analytics in the insurance industry. In her role she provides thought leadership and guidance to help customers leverage their data and technology investments. In addition to insurance she has worked with many other industries including airlines, banking, consumer products, healthcare, manufacturing, mining, oil and gas, and utilities.

Pat is a faculty member of the International Institute for Analytics (IIA), co-founded by Tom Davenport, and is a frequent speaker at industry and analytics events on the topics of data warehousing, analytics, and BI Strategy. Pat authored the chapter on business value in the recently published IIA book, Analytics in Healthcare and the Life Sciences.

Pat has been a columnist for Best’s Review magazine’s “Technology Insights” column for the past 10 years. She has blogged in various social media outlets. Pat has served in numerous industry roles. She is past president of the Society of Insurance Research, past chair of the Society of Chartered Property and Casualty Underwriters (CPCU) Information Technology Section, has been a director of Insurance Data Management Association, and has been an education committee member of Insurance Accounting & Systems Association (IASA). She is also past president of APIW, an organization of executive insurance women.

Pat holds the Society of CPCU professional designation and has been awarded a Fellow of Insurance Data Management by the Insurance Data Management Association (IDMA) in recognition of her advocacy of and contributions to the field of data management and analytics.

“Pat Saporito is one of the sharpest minds in the IT business for insurance and financial services. Her deep understanding of the playing field and her devotion to analytics as a key to optimum business processes is unmatched. In particular, Pat really gets it when it comes to the critical importance of the business/IT relationship, and she knows how to apply her wit and wisdom to make all the players around her better.”
—Ara Trembly, Founder, The Tech Consultant

“Pat’s vast experience, knowledge and insights come to life in this book, a must read for all insurers.”
—Deb Smallwood, Founder, Strategy Meets Action

“Finally, Pat has provided a data analytics roadmap for insurance industry decision makers—not just research, but applied research to our industry.”
—John A. Cherba, Past President, Society of Insurance Research

“Pat Saporito is that rare individual who understands the business end of insurance and can then match business needs with the supporting technology. She cuts right through the jargon with specific insights about insurance business needs, the data at the heart of our business, and applying analytics for optimal outcomes. Essential reading for anyone who needs to leverage data to drive business results. Pat worked closely with me as an advisor to the Institutes’ Associate in Information Technology (AIT) program and also with the Insurance Data Management Association (IDMA). Anyone studying analytics or insurance data (such as the AIDM or CIDM from IDMA) will find this to be valuable supplemental reading and a treasured reference.”
—Martin J. Frappolli, CPCU, FIDM, Senior Director of Knowledge Resources, The Institutes (Institute for Chartered Property Casualty Underwriters and Insurance Institute of America)

“Pat’s experience, knowledge, and know-how make her one of the few insurance data professionals who can provide practical and reasonable advice and insight on data uses and needs to carriers and insurance organizations.”
—Bill Jenkins, Managing Partner, Agile Insurance Analytics and former CIO, Penn National Insurance

“As we move into a time with big data and cognitive computing, we are very fortunate as an industry to have thought leadership that brings front and center—as Pat has discussed in her book—topics that we must incorporate and look to as points of reference and most importantly, lessons learned. Great reference materials and perspectives!”
—Cindy Maike, Associate Partner, Insurance, Global Business Services, IBM

“Pat Saporito is acknowledged by all who know her as the consummate industry thought leader. Given her range of experience from the business to IT and analytics, she is a tireless evangelist for communication among all the parties that make our industry tick. I am excited about her using her passion for analytics to empower the business users and their technology partners.”
—Beth Grossman, Chief Learning Officer, ACORD

“Pat Saporito is both an insurance industry analytics thought leader and a pragmatist. She uses her extensive industry experience to help insurers understand key use cases and then makes them come to life using actual industry case studies.”
—Dennis A. Steckler, Partner, Global Insurance Solutions, Return on Intelligence, Inc.

“I have had the pleasure to work with Pat on a number of occasions to talk with clients about the business value of analytics. Pat knows this better than anyone I know. In her book, she connects the dots between business challenges and analytics capabilities in the insurance industry and provides a roadmap on how to optimize analytics in practice.”
—Dwight McNeill, Professor and Author of A Framework for Applying Analytics in Healthcare: What Can Be Learned from the Best Practices in Retail, Banking, Politics, and Sports.

“Pat provides an in-depth analysis and guideline to the competitive advantage weapon for the Insurance industry winners of the future. The difference between winners and losers will be analytics—Pat provides an in-depth guide for successful adoption.”
—Piyush Singh, CPCU, SVP and CIO, Great American Insurance Co.

Preface x
Chapter 1 Analytics in Insurance Overview 1
Chapter 2 Analytics Strategy and Execution Framework 13
Chapter 3 Defining, Prioritizing, and Aligning Needs 23
Chapter 4 Defining and Using Metrics Effectively 35
Chapter 5 Analytics Value and Return on Investment 45
Chapter 6 Data and Information Architecture 61
Chapter 7 Analytics Tools 77
Chapter 8 Organization and Implementation 89
Chapter 9 Analytics Skills and Culture 103
Chapter 10 Use Cases and Case Studies 113
Chapter 11 Future of Insurance Analytics 141
Appendix A Analytics Evolution Models 149
Appendix B Actionability and Metrics Frameworks 151
Appendix C Analytics Blogs and Videos 163
Index 179

Insurers: Use analytics to drive far more value from your most important asset — data!

• Leverage analytics to improve insurer business performance and customer satisfaction
• Master insurance industry-specific analytics best practices, plus the most valuable techniques from other industries
• Understand your current analytics maturity, choose the new applications that offer the most value, and overcome key obstacles to deployment
• Align your current analytics program with business strategy: gain more value from existing assets, technologies and tools
• Contains up-to-date case studies, practical tools, and easy-to-use templates

Insurers: Use analytics to drive far more value from your most important asset — data!

• Leverage analytics to improve insurer business performance and customer satisfaction
• Master insurance industry-specific analytics best practices, plus the most valuable techniques from other industries
• Understand your current analytics maturity, choose the new applications that offer the most value, and overcome key obstacles to deployment
• Align your current analytics program with business strategy: gain more value from existing assets, technologies and tools
• Contains up-to-date case studies, practical tools, and easy-to-use templates

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