Whitepaper

Insurance Business Analytics

Actionable Intelligence Enabled

version: 1.2 | Published on: 09/01/2012 | Alok Ranjan. Insurance CoE

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www.hexaware.com

Whitepaper
Insurance Business Analytics

Table of Contents
1 Introduction
1.1 Current scenario in Insurance Business Intelligence
2 Abstract
2.1 What Insurance Business Analytics can do?
3 Proposed Solution
3.1 Problem Statement
3.2 Introduction to Solution
3.3 Key offerings
3.4 Tangible ROI - Business Benefits
4 Future Direction
4.1 Long-Term Focus
4.2 Conclusion

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Whitepaper
Insurance Business Analytics

1 Introduction
1.1 Current scenario in Insurance Business Intelligence
With improvement in data warehousing techniques and advancement in storage capacity more and more data is stored in an enterprise warehouse.
With improving data mining technology it is feasible to make knowledge discovery in a manner which was impossible earlier. New tool capabilities,
new business models and new data sources are constantly emerging. They help in knowledge discovery and finding actionable intelligence from
internal data.
Insurance is a data intensive industry and insurance companies create huge data. Insurance companies realize that they have huge wealth of data
which can be used to find answers to business related questions like

Which distribution channel is best performing?

Where is an opportunity to upsell?
Is there a pattern in claim that is received?

Finding answers to questions like these was impossible and impractical earlier because of non-availability of reliable data and technology to support
data mining. Through data mining and reporting technology it has now become possible to take a look at the enterprise data from different
dimension and derive actionable intelligence out of it.
Business Analytics is helps to align all the data within an organization to make sure data is accurate, timely, in context and available to all who need
it. There is no dearth of such software and the choice depends on utility, price and performance. Once Insurance companies understand the power
oftheir own data the requirement of knowledge discovery extends from reporting and dash-boarding to scoring and predicting.

How knowledge discovery works

Integration
Interpretation &
Evaluation
Industry Data - Various Source

Data Mining

Pattern & Rules

Understanding

RAW DATA

Transformation

Target Data

Selection &
Cleaning

Data
Warehouse

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2 Abstract
It goes without saying that the availability of correct data at right time is the key to taking timely decisions. On top of it if the business data is
represented in most innovative manner, it helps understanding it quickly and drawing meaningful inference. Further if the business user is given
option to drill down to the granular level, they may not ask for more.
Insurance Analytics solutions are designed in a way that it can draw required data from source systems (often disparate and even excel files) on a
regular basis. For achieving this one has to innovatively design the data model which can store all necessary data required to produce reports /
dashboards. Once this data-model for insurance analytics is properly designed the key to its success lies in developing link with the data sources to
get correct transaction data into the data warehouse at the defined interval. One has to design links in a way that it gets all relevant data from different
data sources at the same time.
Other key requirement is designing the dash-boards so that it presents the data in most innovative way. The graphical representation of data allows
end user to understand business performance at a glance for which otherwise they would have to shuffle through endless reports. Further these
dashboards must allow end user to drill down to the minutest level and also download relevant data in desired format for further use. The interface
designing is done by understanding the key performance indicators (KPI) which is most relevant to the insurance companies. This can be done either
by asking the LOB managers to define the KPIs which are most relevant to them or by bringing in industry knowledge and suggesting standard KPIs.

2.1 What Insurance Business Analytics can do?

Insurance Business analytics can hold the key to optimized performance. It provides actionable insights, trusted information which helps in taking
informed decisions. By bringing together all relevant information in an organization, companies can answer fundamental questions such as;

What has happened?

What is going right and what has going wrong?
Why is it happening?
Predict - what is likely to happen?

Some examples:

Business By Channel
Time Run:7/25/2011 2:38:56 PM

Premium Analytics

750

Cost

600

What is the overall position of Premium Income? What is the performance of

different distribution channels and how are they performing against their
targets? It is important to know performance by geography drilling down to
Zone, Region, Branch and so on.

Persistency Analysis

450
300
150
0
Agency

Broker

Corporate
Agent

Direct

Lapse Ratio By Channel

Time Run:7/25/2011 2:28:47 PM
Agency

40
32

It is always profitable to retain existing customer and the key indicator is

persistency of business. Low persistency can be due to lapsation and it is
important to understand the customer segment where lapsation is
high. Our Insurance Analytics helps you to track persistency ratio on various
dimensions and compare it not only with your company target but also with
industry average.

Claims Analytics

24
16
8
0

Direct

Corporate Agent

Claims Ratio Analysis

Time Run:7/25/2011 2:14:45 PM

Claims performance tracking is required to increase customer satisfaction

and at the same time identify patterns. Analysis of TAT for various
processes helps understand bottlenecks. Analysis of repudiated claims
helps find possible pattern of fraud.

Loss Ratio : 51.18

40

Expense Ratio : 26.78

40

60

80

20

Hexaware Technologies. All rights reserved.

Broker

100

40

60

80

20

Combined Ratio : 77.96

100

60

80

20

100

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Insurance Business Analytics

3 Proposed Solution
3.1 Problem Statement
In many Insurance Companies a divide exists between IT and a LOB managers need for knowledge and information. Storage systems help to
accumulate transaction data every day and IT managers are required to create data dump for business users for their analysis and reporting. Data
dump extracted from IT systems is passed on to business users which is used for analysis and reporting on periodic basis. The process is repetitive,
time consuming and prone to human errors and having one view of business data is always a challenge.
Not that the insurance companies are not mining their own data but the way they do it is inefficient and time consuming. Problem lies in the fact that
most of these data is generated by disparate systems and there is a possibility of the data present in different formats. Combining the data derived
from disparate system to gain actionable knowledge through use of spread sheets cannot deliver information showing it from different dimension. It
is also possible that after doing an intensive exercise one may not derive information which allows view to minutest level and present them in most
innovative manner.

3.2 Introduction to Solution

Insurance Business Analytics involves the following components.

Data model Data model supporting data marts with report-friendly three-tier hierarchy summary, highly summarized, and KPIs
ETL Extract, transform, and load technology for data movement, aggregation, scheduling, and error handling
Parameterized reporting frameworks Provide a broad range of business segmentation, dependency analysis, trending, meeting needs
such as channel management, underwriting efficiency, claims management, regulatory compliance, customer service, and distributor
management
Installation and implementation Includes installation of the software, basic customization, documentation, and application training.

Lapse Ratio
Time Run:7/25/2011 2:14:45 PM

Persistency Ratio
Time Run:7/25/2011 2:14:45 PM

Loss Ratio : 51.18

40

40

40

60

40

60

80

80

20

100

Total Business
Renewed Business
Industry standard- Lapse Ratio
Lapse Ratio

60
42
15
30

Total Business
Renewed Business
Industry standard-Persistency Ratio
Persistency Ratio

New
Business

Target Premium(mn)
Achieved Premium(mn)

80

Channel Auto Trend

60

80

20

120
100

3.06
1.26

100

Loss Ratio(%)
Expense Ratio
Combined Ratio(%)

Modify

Policy
Servicing

40

60

20

100

100

Modify

Modify

Channel
Analytics

60
42
85
70

Select View

Combined Ratio : 77.96

80

20

100

40

60

80

Expense Ratio : 26.78

60
20

20

Ratio Analysis
Time Run:7/25/2011 2:14:45 PM

Claims Ratio Analysis

Time Run:7/25/2011 2:14:45 PM

Target Status
Time Run:7/25/2011 2:14:45 PM

Premium
Analytics

51.18
26.78
77.96

Lapse ratio, Persistensy ratio

60

30

0
April

August December February January

July

June

March

May

November October September

Claims
Analytics

Insurance Analytics
Enterprise DWH
Policy Admin
System

Channel
Management

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CRM

Claims Data

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Insurance Business Analytics

3.3 Key offerings

The Insurance Analytics solution from Hexaware brings best of breed analytics which offers:

Business user friendly reporting on traditional warehouse

Leverage In-Memory Analytic Tools for Quicker Access to data
Subject oriented Dimensional model; supports ad-hoc, self-service and dash-boarding capabilities
Independent of the BI platform
Industry standard and Customizable KPIs
Adapters to standard products and industry standard data models
Security level can be assigned for giving customized level of data viewing
URL based access on mobile device.

Insurance Processing Subjects

Data Model
A_EDUCATION

A_MARITAL_STATUS
A_PROFESSION

A_GENDER
A_CLAMANT

Channel /
Marketing

A_AGE_DRIVER
A_VEHICLE_MAKE

A_VEHICLE_COLOR

A_PROPERTY_CLASS

A_PROPERTY_STATE
REPUDIATION_D

TIME_D
AGE_D

New
Business

Premium
Analytics

POLICY_TYPE_D

CLAIM_CAUSE_D
POLICY_PERIOD

ENGINE_CAPACITY
A_TIMES_D

CLAIMS_F
SEGMENT_D

Insurance
Business
Intelligence
Management
Dashboards

CLAIMS_TAT_F
CHANNEL_D
PRODUCT_D

Policy
Servicing

Claims

CLAIM_TYPE_D

A_VEHICLE_AGE

TAT_PROCESS_D

Key Analytics Areas

Premium Analytics
Channel Analytics
Policy Servicing Analytics
New Business Analytics
Claims Analytics

3.4 Tangible ROI - Business Benefits

Going with the pre-defined data model helps faster implementation by 30% compared to effort required in creating specific data model
Hexaware Insurance Business Analytics effectively puts to end the dilemma of buy v/s build decision. It is based on industry standard data model
and use best of breed reporting tools.

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www.hexaware.com

Whitepaper
Insurance Business Analytics

4 Future Direction
4.1 Long-Term Focus
It is not always possible to do analysis of data in real time as the aggregation of data into a data warehouse has its own challenges. Mostly today the
dashboards are available for past data, be it a day old or week depending upon the frequency on which the data is extracted into the DWH. However
it appears that the business users wouldn't want to wait for information and BI users are beginning to demand real time or near real time, which is
more in demand for data analysis relating to their business, particularly in front line operations. It is not too distant when insurance companies will
demand real time business information. Monthly and even weekly analysis will not suffice.
Other developing area is analytics offering on mobile devices. At present the BI dashboards and reports are being accessed using mobile devices
either through URL or dedicated apps. As per industry estimates roughly 30 -35% of BI will happen through mobile devices by 2014. Moreover the
trend may change from accessing reports using mobile devices to BI application developed for mobile devices.

4.2 Conclusion
Insurance is a data-rich industry; every insurance company has pile of data running into tera-bytes. But unfortunately, most of that data is either
underutilized or unutilized.
There is growing awareness and demand to extract actionable knowledge from internal data which is key to gaining a competitive advantage by
analyzing this data and getting a greater insight into their business. With help of Business Intelligence techniques Insurance firms can unlock the
intelligence contained in their operational applications - like policy administration, claims management, SPM and CRM solutions - through modern
data mining technology.
Slice and dice of operational data can throw useful insights into monitoring the performance of producer, tracing process efficiency of operations and
decipher patterns form claims data. Not only this, a deep understanding of past data can be helpful to design new products and related marketing
strategies, enabling the insurance firm to transform their own data into a wealth of information and actionable intelligence.

To learn more, visit http://www.hexaware.com

1095 Cranbury South River Road, Suite 10, Jamesburg, NJ 08831. Main: 609-409-6950 | Fax: 609-409-6910
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Contents of this whitepaper are the exclusive property of Hexaware Technologies and may not be reproduced in any form without the prior written consent of Hexaware Technologies.

Hexaware Technologies. All rights reserved.

www.hexaware.com