Golden Record Helps Insurers Retain Clients

In our Risk and Operations in Insurance webinar my colleague Frédéric Valluet and I discussed how having a golden record — a single, congruent view of a customer — helps insurance companies manage customer, risk and operations data. Frederic is the domain expert for Insurance and Healthcare in EMEA for MarkLogic. Below is a recap of some of the highlights from our webinar.


AO: Frederic let’s talk about achieving a congruent, 360-view of customer, risk and operations in the insurance sector. Now, some of our clients with years of experience in insurance may think combining the three really is difficult to achieve. Why is that?

FV: Sometimes these things are easier to understand on a smaller scale, so let me illustrate with a more personal example. Most insurance customers don’t have a clear vision of all the policies they have so they can’t see all of the details about their healthcare, life, P&C, savings, and pension policies.

And it’s easy to see why – because this information is spread across documents they signed over several years, mostly without really reading them. And then they immediately shoved them into a binder or tossed them into a box and moved them to the attic in the likely hope that they would never have to look at them again.

Insurance companies have almost the exact same issue but on a larger scale. Around 20 percent of their customers’ information is spread across silos. That means some of it is in a customer relationship management (CRM) database; some in a policy, claim, and billing management system; and other information comes in through web portals and mobile applications. I think we all know that information is coming at us in waves, from everywhere. More information seems like a good thing, but all of these pieces of information get stored in different places and each of those places has its own structure. Relating that back to our personal customer example, they’ve stored their policies in binders and boxes, with the older files in the attic and new ones in the downstairs file cabinet.

When we think about companies with tens or hundreds of such systems, we can all imagine how hard it is to gather information on one customer from all of the places they’ve stored data. Just thinking about the programs we need to write so we can find, access, convert and combine data from all of those silos so that we can get on with any particular job makes most of use break out in a sweat.

AO: Yes, indeed, and so far, we’ve talked about only 20 percent of their customer data. What about the remaining 80 percent?

FV: The remaining 80 percent? In a lot of instances, it sits unexploited, maybe abandoned, in electronic document and content management systems.

That’s mostly an artifact of the changing insurance market. Years ago, a policy would be underwritten for years, and insurers’ main goal was to get a new customer. But now, customers can be volatile, ephemeral. For example, in the UK market, 50 percent of customers changed their insurance providers in the last 2 years.

AO: That’s a big rate.

FV: Absolutely. It means that insurance companies are emphasizing keeping customers on board in addition to acquiring new customers.

That is why a congruent, single view of business is strategic: To retain customers you have to know them and understand their motives.


Use One Query Across All Data Sources

AO: So we understand the need to see data in one place, but I think we need to talk about why we can’t do this right now.

FV: That’s a good point, and I’ve already alluded to some of the problem – if your data is stored in different places in different formats and is used for different purposes, you’re going to spend a lot of time writing programs to pull it together so you can ask it questions and use it for a specific purpose. Added to this problem is that many of these data stores are relational, and that means there is a good chance that at least some of the data in it was manipulated to fit into a relational database – even if it was better suited to another format.

I have a funny story related to this. A few months ago a customer told us that he could get a congruent view of customers with his traditional relational technology. And we answered: “Sure you can, but in which decade?” And that’s the point; doing it isn’t the only challenge. Companies have to do it as fast as possible.

Because having a complete, 360-view is not an end; it’s more of a means to an end, or the start of the journey, so to speak. Having the ability to use one query across all data sources lets companies serve their customers better, attract prospects, efficiently manage marketing campaigns, and finely evaluate their risks.


The Golden Record Provides a Single View of the Customer

AO: It’s easy to see the problem with making data easy to query, and it relates to the need for insurers to have that the golden record. What does that phrase mean and what is the major obstacle in creating this at an enterprise level?

FV: As I said previously, data is spread across silos, and each silo has its own structure, is adapted to its purpose, and this makes it is difficult to relate data or establish if two customer records reference the same customer.

AO: What do you mean?

FV: Imagine that in highly intermediated markets, such as the U.S., customers used to belong to brokers, agents, and distribution networks. So as an insurance company, a customer is not a managed notion. Each underwritten policy carries customer information, and a policyholder is added each time as a new customer, even if he is already a customer. It means that several different policyholders are, in fact, the same customer, but the company has almost no clue of it.

AO: And each policyholder is managed as a single customer?

FV: That’s right. So the first challenge is to find out if a customer appears several times, and if so, how to relate each occurrence to build this single view that will describe the whole portfolio across the company.

This holistic view of a customer will help insurers understand who this customer is, what his characteristics are, his risk profile, which coverage commitments were taken or how much in premiums he pays each year.

AO: And that is the golden record?

FV: The golden record is the synthesis of all this information, which will become the source of truth when somebody looks at a customer. It allows all people involved in a portfolio management to work with the same level of information, to answer any request or to take any decision based on the very latest available data.


Data Management Reduces Insurers’ Risk

AO: Insurance is a business of managing risk – but you can’t accurately calculate your risk if you can’t effectively access and use all of your data because it’s tied up in data silos. This threatens both your margins and your competitive position – and leaves you vulnerable to compliance issues as well. What does the market tell us in terms of risk management in insurance?

FV: That’s a good question and one McKinsey asked in July 2016. They did a survey on enterprise risk management in insurance and found that a quarter of respondents cited “data governance and quality” and another quarter cited “automation and speed of data gathering” as their initial improvement priorities. This means that half of respondents know that they have issues with their data and that they have to solve them to run their business better. But my guess is that they’re not sure how to go about doing that.

AO: That’s a lot. Why is it so strategic now?

FV: Data management isn’t a new issue, but the environment insurers exist in has changed. Let’s just consider compliance – it’s stricter and getting even more strict. Companies have to be able to give a quick response to any compliance request.

AO: And what about risk management?

FV: That is the same thing. Usually, risks are evaluated theoretically based on actuarial models. Insurance companies are today interested in having a better knowledge of the real risk they are hedging. They want to be able to make decisions based on a clear vision of the actual situation. It means that they have to know who really is a customer, what they know about his relationships inside and outside the company as well as with the company, his household composition, his living habits, his behavior, his portfolio, his potential, his sentiment about the company …

AO: That can be pretty intrusive.

FV: Yes, but customers have also changed, and some of them, and not only millennials, are willing to share some of these information to get a better service.


NoSQL Platform Helps Meet Data Challenges

AO: How can technology help mitigate risks?

FV: In quite a number of ways, and many of those have to do with managing data better. Being able to better manage data governance and quality to automate and accelerate data gathering is the very first step. That is where an enterprise NoSQL platform, such as MarkLogic, brings a lot of features and capabilities that help companies easily and quickly solve this first challenge.

AO: Do you have examples of such achievements?

FV: One of our customers has been trying to solve this issue for 5 years with a traditional relational MDM technology. And he never succeeded. But then he tried with MarkLogic and did it literally in a few weeks. That’s amazing!

And we have hundreds of similar examples. The important point is that it was just a beginning for them. Once they have a single view of the customer, they started to develop new use cases and to address new needs – even old ones they hadn’t been able to solve.

Two of the most interesting things they were able to do using MarkLogic are:

  • have a geospatial representation of their actual risks based on customers’ information crossed with natural catastrophes damages maps, with heat spots based on both insured values and most damaged areas.
  • building dynamic social graphs to visualize relationships between facts, locations, insured objects, people and providers, to detect network fraud.

And probably one of the things that people don’t think about including when going for that congruent view of a customer is including documents. There is so much information stored directly in documents – and nowhere else.

With MarkLogic you can use data stored in different types of silos – even document stores – to quickly build the golden record. That hasn’t been possible to do in an easy, scalable way with traditional data management systems.


Insurers Improve Operations with a Single View of the Customer

AO: Now let’s discuss the fourth element of the technological approach we are advocating – operations.

I have found some very insightful statistics quoted in the Wall Street Journal that say that those businesses that “share business technology across units and departments grow faster and have lower costs than rivals that don’t do it as much. By taking advantage of what they already do well, these firms can devote more energy to real innovations.”

Is this applicable to insurance?

FV: Yes, it is. The golden record lets you speak the same language when working with data. This lets an insurer know, for example, that when a claim clerk is analyzing a file, he has a clear vision of who the customer is for the company.

AO: But that is not a matter of technology, is it?

FV: Actually it is. Insurance companies used to have two choices to streamline processes between departments:

  • either implement or build applications on top of their legacy systems, which probably weren’t put in place for the reason the application is needed, or build data warehouses in the middle of applications,
  • or migrate everything in brand new, fully integrated, professional software that came with a promise of agility, modernity and efficiency, but mostly didn’t.

But we probably all know what these options are really costly – project duration, maintenance, impacts on existing IT landscape, business disruption …

AO: What is MarkLogic’s role in changing what the market looks like today?

FV: MarkLogic lets companies easily and quickly create this golden record, without impacts on existing functions, and we can do it without disrupting business. Our solution harmonizes the level of information across a company and supports decision making the best way.

AO: Many in our audience come from the relational background and insurance is a traditional market. How can we comfort those who are not ready to change the status quo?

FV: Probably the first thing to say is that you don’t have to abandon your relational data. Instead, you can use it AND add other types of data to it to answer an amazing variety of questions. Have you ever been able, on a single platform, to ask questions on topics as different as geospatial representation of your customers, co-occurrence of claims circumstances and served benefits, visual customer’s household representation, distance calculation between claim and declared residence locations to track fraudulent statements, temporal evolution of policy’s endorsements compared with requests or loss notifications to detect opportunistic changes, sales and operations statistics? MarkLogic can do it, in a fully secured and operational manner based on huge volumes of data thanks to its strong scalability, and in a short period of time to deliver faster applications.


For more information on this topic

Risk and Operations in Insurance 60-min webinar on how to wrap your arms around “Customer Centricity” and get that golden version of the truth.

Insurance: Your Data Deserves Better Insurance: Your Data Deserves Better, White paper on how MarkLogic helps insurers connect with customers, manage risk complexity, and reduce losses from fraud.