Data management brings tremendous value to a business. Knowledgeable and trained data management professionals can help you save money, increase revenue and improve customer satisfaction while
protecting one of the your most valuable assets-data. These benefits can be obtained by effectively and efficiently maximizing the information conveyed by your data and ensuring that the data are
of the highest quality. Data is the raw material for key business functions and does not realize its full value unless it is of high quality, well-understood and well-utilized.
Wouldn’t it be great to have trained, and even certified, professionals help you and your actuaries answer questions such as:
Does your data consist of valid, acceptable values?
- Does your data describe the true underlying situation?
- Does your data make sense?
- How does it compare with similar data from prior periods?
- How does your data compare to industry norms?
- Do you have all the data you need?
- Is the data current?
The value of data and data quality to actuaries, particularly in the era of Sarbanes-Oxley, cannot be overstated. Good data management allows the actuary to have more confidence in, and a better
understanding of, data being used. This can also assist the actuary in his/her professional responsibilities to certify data quality (e.g., Actuarial Standard 23 on Data Quality).
Better data creates better information and results in better decisions. Improved pricing can mean stronger bottom lines, greater customer satisfaction, higher customer retention, increased numbers
of customers and enhanced ability to explain, support and defend decisions. Documented, controlled data management processes help give weight to assertions regarding the validity, integrity and
utility of data being used. As data availability increases and data can be sliced ever more finely, attention to quality, privacy and confidentiality is critical. Data management skills help to
ensure that all these concerns are addressed. The actuary’s time is freed up for more focus on core professional responsibilities, decisions and analysis when effective data management is assured
under the guidance of a skilled data manager. Involvement of a data management professional allows other disciplines to do what they do best.
Consider the claims discipline. Expediting the claim settlement process can save an organization real dollars and improve customer satisfaction. This is not news. But with the skills of data
managers in the process these objectives can be accomplished faster and more effectively. They can also accelerate adjuster access to financial detail and check issuance capabilities for timely
payment processing. With a solid understanding of data and data patterns, fraud can be more readily identified and successfully prosecuted. The ability to effectively and efficiently understand
claim data can help produce benchmarking studies and establish best practices, thereby producing better results at lower cost. Claim data must often be linked to data from other internal or
external sources to fully understand and gain value from a company’s own experience. When facts are required in a litigation situation, they can be more easily extracted and identified by a data
manager, saving time, money and helping in obtaining a fair result.
Customer service and product development depend on data and information about individual customers and the collective customer base. Data management processes and tools can promote speed-to-market
for new products and services by defining and maintaining data or links to data needed by underwriters to research and develop changes to current and yet-to-be-developed coverages and policy forms.
Quality customer data enhances customer acquisition, retention, service and satisfaction. Well-maintained and understood data supports Customer Relationship Management (CRM) activities. Successful
and unsuccessful programs can be more easily identified.
Regulatory initiatives (such as special data calls) can arise and be imposed on short notice. They can build momentum over time. Once implemented, they often persist. You need to be able to:
- Identify solutions using available data
- Provide expertise on the availability and location of data
- Ensure the quality of data reported to regulators
- Evaluate the future enterprise impact of regulatory, as well as other industry, proposals and initiatives
- Provide professional credibility
When your systems are structured and prepared to be responsive, you can be too. And by providing timely and quality data, costs associated with non-compliance are avoided.
Data management brings a broader perspective to data reporting. This can help answer and handle reporting questions and requests more effectively. Consider these points. Good data management:
- Provides tools and techniques to define and document data and data quality standards
- Makes data and data quality definitions and edits available to all users through tools such as data repositories and data dictionaries
- Assists industry organizations in defining data and data quality standards
- Assists in the creation and population of data warehouses
- Ensures quality data reports to advisory organizations, research organizations and regulators
- Eliminates redundancies in reporting and reporting systems
The value realized from effective data management goes beyond the benefits of better and more efficient data reporting. Systems are well-managed, well-defined and everyone in the organization is
better informed.
Focusing on financials is and always has been a critical part of any successful business strategy. In today’s business environment, that focus is elevated to a new level of significance. Data
management skills bring value, credibility and efficiencies to the many financial reporting and financial management obligations and needs a company has.
Data management skills are critical in establishing requirements and controls that ensure accurate statutory reporting, financial reporting, and statistical reporting and ensure that data needed
and produced for those processes is reconcilable. Skilled data managers can identify the means to most effectively capture statutory, financial, and statistical data and report that data across
systems and applications. They can direct systems/applications development efforts in support of statutory, financial, and statistical reporting requirements, and ensure that the data can be easily
communicated, internally and externally, with minimal translation. These functions and skills are critical in the development of controls to meet solvency requirements.
Redundant systems, applications, and functions are not cost-effective. They increase the likelihood of errors occurring and inconsistencies existing between and among systems. Data managers can
build solutions to ensure such redundancies do not exist.
Information technology is not just about technology. To be effective, it must also be about the data and information it is applied to. A good technician cannot develop a good solution without
knowledge of the data that is being dealt with and the uses for it. That’s where data management skills come in. Such skills can provide value to the information technology discipline by:
- Reducing system complexity
- Decreasing system to system variations, leading to decreased ‘learning curves’
- Managing data content and definition across the organization
- Simplifying data translation and data scrubbing
- Promoting the interoperability of data and databases
You may not think of data management when you think of marketing but where would a marketing plan be without the foundation of good data about one’s customers and the business environment? The
data management discipline supports the marketing function by enabling it to better assess current and potential markets, to provide better service to customers and to identify prospective
customers.
Data management helps you focus on your target customers by integrating multiple data sources (e.g., business information, insurance profitability) to help accurately reflect market segments. With
quantifiable assessments of markets, decision processes on whether and how to move forward are based on more sophisticated and better-linked data, making it easier to:
- Benchmark internal data to pinpoint areas of company strength and turn those into new market opportunities
- Review current market penetrations to identify changing business environments
- Focus on those segments that are in line with your strategy
- Enable cross-line business analyses
Senior management must have a strong understanding of and solid knowledge of data management. While this might not have been quite so apparent several years ago, legislation such as the
Sarbanes-Oxley Act has changed that. Senior management is now held responsible for the integrity of data, systems and processes.
The benefits of a senior management team skilled in data management go beyond legislated requirements. A team so equipped is better positioned to:
- Participate in the development of an enterprise data vision and strategy
- Promote the recognition of data as an asset that requires management to ensure maximum benefit to the organization
- Protect the privacy and confidentiality of the enterprise data
- Ensure compliance with data reporting laws and regulations
- Promote the organization’s credibility with regulators, workers’ compensation administrators, advisory organizations, research and standards organizations, and other industry groups
Whether you are an actuary, claims professional, underwriting professional, statistician, compliance officer or work in almost any other function, knowledge of data management or the assistance of
data management professionals can help you do your job better and help you prepare, understand and protect the raw material-the data-you are working with. In the current business environment, this
is no longer a luxury. It is a necessity.
The Insurance Data Management Association (IDMA) is an independent, non-profit, professional association dedicated to increasing the level of professionalism, knowledge, and visibility of
insurance data management. Its membership includes insurers, statistical agents, regulators and others dedicated to promoting professionalism in the data management discipline. The Association
provides professional certification in data management. IDMA also provides forums for discussion and sharing of ideas on topics critical to data managers.
To learn more about IDMA, the data management discipline and potential value to your organization visit www.idma.org or contact IDMA’s Executive Director
Richard Penberthy at rpenberthy@idma.org.
