The pressure on P&C insurance carriers to quickly implement digital transformation (DX) strategies continues to mount. In the race to become digitally relevant, insurance leadership may make superficial changes to interfaces and processes in an attempt to rapidly improve customer engagement. While this may be a logical first step in becoming more digital, CIOs and CDOs at insurance organizations are starting to realize that they need to look deeper within their enterprise architectures to create a holistic 360-degree view of customers in order to build new engagement models.
The benefits to adopting a customer-centric approach are clear, but P&C carriers must make the right technology investments to improve core data-management capabilities in order to strengthen customer loyalty and competitive positioning. Here is a look at the opportunities and challenges for improving data integration, and how a MarkLogic customer in the insurance industry has benefited from implementing an Operational Data Hub to drive its customer-centric DX strategy.
Investments made to continuously improve customer engagement and experience pay off for insurers. Research by McKinsey on the auto insurance carrier market found that insurers that deliver best-in-class customer experiences had better performance than those that did not. Specifically, those insurers had significantly higher retention rates, generated 2-4 times more growth in new business with customers and reported 30% higher profitability than firms with inconsistent customer focus.
Like putting “lipstick on a pig,” DX does not mean simply enhancing the existing user interface for your website—it must go deeper than that. Developing a customer-centric approach means starting with the data you collect and use about your customer. According to Willis Towers Watson research, less than half of P&C insurers currently use internal customer data. Over the coming years, while the overall use of customer data is expected to become more mainstream, the use of newer data sources is expected to grow significantly.
P&C insurance carriers are planning to meet emerging customer needs by integrating data sources to improve analytics in claims, underwriting, pricing and customer service, as reported by Willis Towers Watson.
Over the next two years, carriers expect the use of unstructured data to grow in importance, as well as usage-based information from telematics. Integration of these sources will enable development of new channels—such as using sensor data to improve underwriting/pricing on properties—and analytical capabilities like applying predictive modeling to reduce probability of claims and losses. Moreover, accessing all of these qualified data assets from a unified source is foundational for advancing machine learning and artificial intelligence programs.
Although the importance of improving the customer experience is clear, carriers are often challenged in reaching data-driven DX goals by a legacy IT infrastructure. The two biggest challenges preventing this transformation are data-warehouse and integration constraints, per the Willis Towers Watson study.
The difficulty in accessing and using the data is often caused by sub-optimal, upstream, data-integration processes used by the IT organization. When using relational databases, IT staff spends significant time and effort trying to ingest structured and unstructured data while attempting to adapt to changing data models and structures. Consequently, insurers struggle to deliver useful data to downstream applications in a timely fashion, ultimately resulting in a less-than-optimal customer experience.
To better compete now and in the future, a large P&C insurance organization recognized nearly four years ago that it would need to invest in modernizing and digitizing its insurance-policy processes and customer experience. Undertaking this strategic initiative would have the dual benefit of improving customer engagement and generating operational efficiencies, but the company would need to address several technical hurdles.
The company was facing technical challenges that are similar to those of other insurers—application data silos, shadow IT systems, complex workflow and integration processes, data mastering challenges and aging mainframe applications and hardware. These limitations made it incredibly difficult for the company to build internal and external applications with a comprehensive view of their data.
After evaluating various technology options, including using existing systems and other NoSQL providers, the insurer selected the MarkLogic ® Operational Data Hub as the foundation for creating a 360-degree view, or golden record, of their customers. The company ultimately selected MarkLogic because they felt it offered them the best option for simplifying processes, speeding up application delivery, using agile processes and turning data into information as fast as possible. They also needed to ensure data integrity (ACID transactions) and security, provide business intelligence (BI) and fit into their enterprise operations.
Leveraging MarkLogic’s Operational Data Hub pattern, the insurer can ingest, harmonize and manage its varied data. MarkLogic’s flexible data model enables the company to store any data type without the need for significant data modeling and transformation processes up front. In addition to meeting its goal of achieving a 360-degree view of customer data, the company now has a database platform that enables them to deliver new applications and functionality four times faster than traditional methods by eliminating costly and time-consuming ETL processes.
Many of the largest insurance carriers evaluated NoSQL database providers and ultimately chose MarkLogic. Why? Because MarkLogic checks all the boxes when it comes to insurer requirements for the highest levels of enterprise security, core and advanced NoSQL database functionality. MarkLogic also has a proven record of enabling the most complex insurance organizations worldwide to improve business performance.
MarkLogic is an operational and transactional Enterprise NoSQL database that allows many of the largest global P&C insurers to integrate data better, faster and with significantly less cost. Visit MarkLogic.com/Insurance to find out more about MarkLogic’s Operational Data Hub solution for insurance, and see how MarkLogic has already enabled data-driven digital transformation for other insurers.
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