Craig Bedell – an insurance industry luminary and old friend – published a great article last week on Carrier Management – The Insanity of Analytics in Insurance (NOW FREE – no membership required).
Despite an abundance of optimism over analytics, AI and more, the insurance industry still has challenges realizing the potential benefits of these new insights. Upon simple examination, the reasons are rather straightforward. “Actionable insights” are only valuable when applied to the day-to-day business of insurance and its processes and decision-making.
Craig’s perspective matches our experience in Insurance too – it’s easy to apply analytics to your data, and spend a lot of money doing so, without getting much of a return. It’s just too easy to get fixated on the cleverness of the analysis, the power of the analytic tools, even the accuracy of the prediction, while loosing sight of the business value – better decision-making. As Mike Gualtieri of Forrester once said:
if analytics does not lead to more informed decisions and more effective actions, then why do it at all?Mike Gualtieri, Forrester Research
This sounds simple to solve. Once I have analytic insight, surely I can just use it to improve my decision-making? Well no. It turns out that this is nearly impossible to do. Insurance companies, like most large, established companies, are hard to change. A piece of analytic insight, no matter how powerful or predictive, is not generally enough to turn the ship.
The traditional approach, which does not work well, is:
- Assemble data
- Do analysis
- Deliver insight
- Get better decision-making
This leads to the insanity Craig talks about because it is to hard to change the decision-making. To succeed, you have to approach the problem backwards:
- What decision do I need to improve?
- What analytic insight would help me improve?
- What data do I need to produce that insight
This approach – DecisionsFirst™ as we call it – is the core of our approach to Digital Decisioning. Only by focusing explicitly on the operational decisions that matter to your business can you avoid the insanity of unactionable (or at least unactioned) analytics.
As the team at Forrester put it so nicely:
Enterprises waste time and money on unactionable analytics and rigid applications. Digital decisioning can stop this insanity.John Rymer and Mike Gualtieri, Forrester Research