Forty years ago, the insurance industry was a pacesetter in the adoption of early information technology. While the industry reaped enormous benefits from that forward-thinking stance, it has come with an unforeseen price tag: The complex legacy IT infrastructures that insurance firms have invested in are often a challenge to replace wholesale.
Because these systems are so sophisticated and entrenched, the industry has been relatively slow to adapt to digital, opting for a piecemeal approach that incrementally refines the capabilities of legacy systems instead of choosing a complete replacement. The challenge is a stark one: A recent research report showed that 68 percent of insurance executives believe that legacy systems are the largest single obstacle to smooth digital transformation.
So how can insurance companies derive value from data and analytics while still operating with a legacy system?
Below we’ve listed a few actionable steps you can take to help you maximize the value of that process.
Integrate policy and claim data
In many cases, policy and claim data are siloed in different systems. This means that those who need this data — agents or customer service representatives — must switch between systems when attempting to access data. While this might not seem like a profound concern at first glance, consider the overall time cost of such inefficient, back-and-forth toggling over months and years as practiced by hundreds or thousands of employees.
Integrating this data not only improves internal efficiency, it also makes for a far more pleasant customer experience.
Always use payment data when developing predictive models
Payment data is exceptionally valuable in terms of directing marketing efforts, yet, often that information isn’t integrated among departments. Targeting customers who are behind in their payments with promotional offers they can’t afford, for example, is a poor allocation of resources and could easily be remedied by integrating payment data.
By incorporating payment data into predictive models, companies can promote their products with greater accuracy, creating a better return on investment.
Integrate inbound contact data
Understanding and accommodating the preferences of your customer base is critically important. The truth, however, is that sometimes the capabilities of a legacy system don’t always align with the modern consumer’s digital expectations. By integrating all inbound customer contact data, it’s possible to develop a window into the channel preferences of one’s clientele and identify those who might be at risk of defecting due to a lack of digital capability.
Operating with a legacy system doesn’t preclude you from extracting valuable data-driven insights. Consider the ideas outlined above to help derive the most value from your legacy system.
William Cao | Chief Analytics Officer
William has earned an MBA from The University of Chicago Booth School of Business, an MS in statistics from Kansas State University, and an MS in applied mathematics from Southeast University. William and his team provide data and analytic leadership to Catalyst’s clients.