Cindy MacFarlane, Head of the Insurance Analytics and Cognitive practice at Deloitte Consulting LLP, is a dynamic leader who has been in the industry for over 30 years and wears multiple hats in Deloitte’s insurance sector practice of 7,400+ professionals. She is the practice leader for the Insurance Analytics and Cognitive group in the United States and manages the overall portfolio of their insurance clients, focusing on initiatives related to data and analytics. In addition, she is a Managing Director responsible for the delivery of data modernization and cognitive insurance projects and is intimately involved with large-scale project implementations, including the largest Teradata-to-Snowflake migration in the insurance sector of the firm. Snowflake met with Cindy to discuss what shifts Deloitte is seeing in the insurance industry and how companies can thrive with data and analytics.
While the insurance industry is one of the oldest industries, it has not drastically transformed since it was established. However, the emergence of digital transformation and the Internet of Things (IoT) and cloud advancements are fueling the need for innovation in analytics and cognitive solutions. Insurers are heavily investing in these areas to reduce costs, deliver faster results, and stay competitive—yet their legacy data management environments and operations are holding them hostage.
Deloitte identifies the following four key trends in the insurance sector that could result in clear benefits fueled by cloud-enabled data modernization:
- Market-growth strategies
- Privacy and regulatory requirements
- Expense reduction
- Becoming an analytics-driven organization enabled by technology
Insurers are shifting investment and focus to create strategic differentiation through digitization while also improving speed to market and improving the cost and quality of delivering analytics through automation, standardization, and self-service. Two of the key trends we are seeing are:
- There’s a focus on improving customer loyalty through a personalized experience driven by the increased demand for hyperpersonalized insurance. With better customer insights and superior digital distribution capabilities, nontraditional firms (for example, technology, manufacturing, and retail players) have been entering the insurance space. Consumers are increasingly turning to nontraditional players for innovative, personalized offerings and for better customer experience1. This has driven a huge shift towards direct-to-consumer channels, as policyholders become more price-sensitive and are more open to buying insurance online. With demand for hyperpersonalized insurance set to increase, more nontraditional players are expected to enter the insurance industry.
- Insurers are planning for and increasing investments in machine learning, AI, and automation to achieve needed cost reduction. Small investments in AI can lead to a high ROI by:
- – Streamlining claims processes using intelligent robotic process automation (RPA), for example, by using RPA to process claims with fewer people or straight-through processing
- – Creating fraud detection tools, which can reduce risk, and leveraging IoT capabilities (for example, telematics and smart-home technology), which allows insurers to offer usage-based products and reduce claims
- – Investing in digital assistants, which can help call centers inundated with large volumes
The urgency associated with legacy policy administration systems modernization has been growing over the past few years and Deloitte’s research indicates that for at least 90 percent of survey respondents, this subject is top of mind for insurer executives2.
Privacy and Regulatory Requirements
Privacy requirements such as the California Consumer Privacy Act (CCPA) and GDPR (General Data Protection Regulation) continue to evolve to protect the privacy of consumers. Insurers must be able to respond to ever-changing requirements and prepare for an unknown regulatory future. This requires insurers to enable policyholders to provide their consent for insurers to leverage their data, anonymize collected data to protect privacy, provide data breach notifications, and safely handle the transfer of data across borders. Modernizing data platforms is being fueled by these nondiscretionary regulatory initiatives with a focus on finding operational efficiencies,. However, regulators in some U.S. states have started to impose restrictions on the use of personal data, starting with California and its CCPA, and other states are expected to follow suit as well.
Focus on Expense Reduction
Following the events of 2020, many insurance carriers are assessing their current data ecosystems to not only fuel market-growth strategies but to also reduce total cost of ownership. Cloud-enabled data infrastructures allow carriers to move to more cost-efficient data ecosystems with significant potential savings. Simply lifting and shifting an on-premises data ecosystem to the cloud can provide near-term ROI. The savings can increase significantly when redundant or inactive repositories and processes are eliminated.
In addition, insurers are expected to increase investments in AI and automation to achieve the cost reductions that are needed due to the aftermath of COVID-19. Small investments in AI can lead to a high ROI by streamlining claims processes using intelligent RPA, (for example, to process claims with fewer people), and fraud detection tools can reduce risk. Insurers are investing in data and analytics to predict potential impacts to their organizations and align their business strategy with agility. Insurers are also investing in emerging technologies and digital transformations while maintaining cybersecurity to be able to react to the needs of the market.
Becoming an Analytics-Driven Organization Enabled by Technology
Data-driven decision-making has always been important to the insurance industry in all facets of the business, from marketing to sales, claims, operational, and actuarial functions. However, a new way of thinking about building a modernized data ecosystem is needed to respond to the ever-changing, highly competitive, and regulatory environment.
Ironically, many of the challenges faced today are the same ones insurers have been experiencing for decades, such as challenges with data ownership and governance, proliferation of data throughout the organization, issues with data quality, and access to near real-time or real-time data as well as complex architectures that can take months to implement to support a business-driven change.
To address these age-old challenges with a goal of becoming an analytics-driven organization, many insurers are assessing and modernizing their data ecosystems to leverage cloud-enabled capabilities. To be successful, these strategic programs require alignment with business and technology, a clearly defined target state, and an execution plan—all focusing on high-impact business needs, while iteratively building a modernization data ecosystem that not only meets today’s needs but will be fit for the future as more-advanced technology capabilities become available.
Trending areas of focus for insurers who are focused on data modernization initiatives include:
- Leverage and consolidate structured, unstructured, and streaming data between internal and external systems that deliver a harmonized view of the data across policy, claims, underwriting, finance, actuarial and billing functions. This will:
- – Enable a unified view for the policyholder and the agent, enabling consistent understanding
- – Provide a key enabler for a digital multichannel/omnichannel experience
- – Deliver the tools and bots required for process and tasks automation
- Focus on the democratization and delivery of information to the hands of the business via operational, management and regulatory reports, advanced visualizations and dashboards, exploratory analytics and predictive models for advanced analytics, enabling:
- – Standardized, optimized, repeatable and scalable delivery of BI and analytics for the enterprise
- – Empowerment of internal decision-makers with the ability to develop more advanced predictive models using modernized data and tools
- – Delivery of analytics-as-a-service to internal and external users
- – Deployment of market leading visualization and data discovery tools to support the business
What Deloitte Does
Deloitte helps its clients implement large-scale data programs that deliver on the promise of technology. It builds analytics capabilities on top of data platforms that tie into a client’s business strategy and provide insight into key questions around an organization’s performance. In addition, it supports the operations and enhancement of traditional data warehouses and next-generation data lakes, along with their related applications and platforms, both in on-premises environments and in the cloud. By providing flexible, long-term, staffing models that allow clients to optimize the data lifecycle, Deloitte helps to put data in the hands of decision-makers faster to drive enhanced analytics insights.
Deloitte was named a leader in the Gartner Magic Quadrant for Data and Analytics Service Providers for the seventh consecutive time by Gartner in its 2021 report3 and is distinguished for its investment in new AI capabilities, its AI business acumen and change management, and its focus on innovation.
How Snowflake and Deloitte Work Together
Snowflake and Deloitte are in the marketplace jointly and work together to ensure successful outcomes for insurers. We help insurance organizations combat the common challenges of cloud modernization to achieve transformation faster with minimal business disruption. Deloitte is a Snowflake Elite Services Partner and our alliance combines the advanced capabilities of Snowflake’s cloud data platform with Deloitte’s recognized leadership in strategy, analytics, and technology services to help businesses speed up their migration to the cloud while reducing costs and increasing agility.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.