Why insurers need to democratise data

Why insurers need to democratise data | Insurance Business Australia

Technology

Why insurers need to democratise data

“This is not anarchy! This is controlled democratisation!”

Technology

By
Daniel Wood

“This is not anarchy! This is controlled democratisation!” said Heidi Badgery (pictured above), at yesterday’s Insurance Business Innovation Summit in Sydney.

The statement sounded like a rallying cry shouted from the barricades during the French Revolution. In fact, the ANZ managing director of Alteryx, a firm specialising in analytics automation, was wrapping up her presentation about how insurance companies should democratise their data.

“What does that mean?” Badgery said. ”It fundamentally means that more people in the business know and understand the data that they have access to and can do something with it.”

“When we talk about democratizing data and when we look at the insurance industry specifically there’s not a function that can’t derive value from data,” she said. “That’s what we talk about when we talk about opening up access to data.”

Big investment in big data

Quoting Forbes research, she said more than 85% of companies are investing significantly in big data.

“I imagine if you look at your organization; data, analytics and AI is a top priority,” she said. “What’s challenging, though, is that only 5% of organizations [according to Forbes] say that they’re data driven, that data is underpinning their decisions.”

This number has actually gone down since the end of COVID-19. Badgery said that reflected frustration across businesses with the time it’s taking to get results from big data investments.

“Our data teams are [also] frustrated, because the hopes and dreams of analytic models and being data driven are weighing on the shoulders of a very small number of people typically in the organisation,” she said.

How can insurers get value out of data?

Badgery brought up a slide with McKinsey research completed in February, specifically relating to the insurance industry.

“They looked at insurance organisations in Europe and how they were getting value out of data,” she said. “Out of the insurance firms they spoke to 86% of them were realizing less than 5% of their operating profit from their analytics initiatives.”

However, she said according to the research, the top-performing firms accredited 25% of their operating profit to their analytics initiatives.

Badgery said that “huge” contribution of data to profits was a result of c-suite led data initiatives that penetrated the whole organisation.

“So it’s coming from the top down,” she said.

Badgery said these insurance businesses were making collaborative decisions across their organisations about where they should prioritize their investment in data. They were also encouraging people to engage with data, work with the data and identify areas where they could get value out of the data.

“They fundamentally broke down the silos across the business – and this was consistent with the top-performing firms,” said Badgery. “And so we come to the concept of data democratisation.”

Don’t become a data scientist

She said this doesn’t mean everyone in an insurance firm has to become a data scientist.

“It’s [also] not about the data team relinquishing control of the data,” said Badgery. “It’s about more people in the business having access to and understanding the data and being able to make decisions.”

She encouraged insurance companies to move away from having a centralised data team controlling data access. Badgery said this doesn’t work because the data team gets overloaded with data requests from other departments and has little time to provide strategic insights from the data.

“When you have this model, no-one is satisfied,” she said and referred to the typically high staff turnover in data teams to help prove her point.

People need to transform too

However, she said it’s one thing to have access to data and another to be able to do something with it. This depends on, she said, a digital transformation that includes people.

“When we talk about digital transformation at organisations, we often neglect talking about the people aspect,” Badgery said. “You cannot have transformation in your business, if you don’t have transformation in your people.”

She said becoming a data-driven organisation depends on helping the people in the business to transform together with the data systems themselves.

“If you want data to underpin your decisions, how do you help the people in your business to transform so that they actually understand the data that’s available to them and can do something with it?” Badgery said.

Thursday’s Insurance Business Innovation Summit was attended by about 200 insurance industry stakeholders. Delegates were able to participate in two streams – Insurtech and Claims Innovation – both featuring a range of speakers and panel discussions.

Did you attend IB’s Innovation Summit? What did you think? Please tell us below

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