The insurance sector has been grappling with data for decades and is perhaps one of the oldest institutions to practice what we would now consider to be Data Science and analytics. The inherently risk averse nature of Insurance has historically demanded Actuaries to implement rigorous statistical and mathematical processes to enable the quantification of risk into a packaged, saleable product. Although insurance organisations have long been aware of the applications of data for business gain, there has been renewed interest in Big Data given the diversification of new sources now available through the exponential growth in technology.
This awakening has resulted in the elevation of data as a strategic core asset and laid the grounds for the adoption of Chief Data Officers (CDOs) as well as Chief Analytics Officers (CAOs) across a multitude of sectors, wishing to capitalise on the repertoire of benefits that come with being more data-centric. However, the often traditional constructs of insurance companies accompanied with a highly siloed method of business, has slowed the pace in the rapid adoption of CDOs/CAOs which has been seen in other industries. However, what is the reality, or perhaps the perceived reality, of the role of CDOs and CAOs within insurance?
In the lead up to the inaugural
Chief Data Officer Forum, Insurance
, I conducted a survey with our speaker faculty to better understand their thoughts on the current status of the CDO and CAO roles.
Where do you think the Insurance sector currently stands when it comes to the maturity of the CDO/CAO role?
Heather Avery,
Director, Business Analytics,
Aflac
“While Gartner estimates that 90% of large organizations will have a CDO by 2019, the insurance industry has largely disregarded this trend and instead opted for including related CDO roles into chief risk offer, chief analytics officer, and/or CIO roles. In essence, the demand for CDO duties are met through a myriad of existing roles. This can be thought of as common practice in the insurance industry and I don’t see this changing in the near term.”
Guizhou Hu,
VP, Chief of Decision Analytics,
Gen Re
“Most life insurance companies still do not have CDO or CAO yet. Data management are treated as an IT function and analytics are done mostly by traditional Actuary using Excel and Access.
Generally speaking, insurance company CDO/CAO roles are much better defined or matured in the marketing sector. While CDO/CAOs are mostly non-existent in traditional underwriting and actuarial pricing or valuation.”
Meghan Anzelc,
VP, Predictive Analytics Program Lead,
Zurich North America
“I would say that the insurance sector is still in the early stages for these roles. CDO and CAO roles are relatively new across all industries. Some insurance carriers have created these roles, others have continued to use the organizational structures already in place (such as having analytics teams sit within each function), and others have taken a more hybrid approach, where there is some centralization of analytics talent and some sitting with each functional area.”
Eric Huls,
Chief Data Science Officer,
Allstate Insurance Company
“The maturity of the CAO role really follows the maturity of the analytics function within a company. Over the last few years we’ve seen all industries, including insurance, begin to lean heavily on data science to stay ahead of the competition and drive strategic decision making. Now that the appreciation for Data Science has taken root, companies are relying on the CAO and CDO roles to set the strategic vision, not only for tomorrow, but for several years into the future. This is a good thing, as the CAO and CDO will be at the forefront of innovation, and the catalyst for driving a data-driven culture within their organization. They’re in the early stages of maturity, but growing quickly. Very soon, I anticipate that these roles will no longer be optional, but rather one of the most critical voices within an enterprise.”
TJ Houk,
Chief Data Officer,
Trupanion
“The insurance sector is positioned to lead in maturing the CDO & CAO roles. Effectiveness as a CDO and CAO is largely dependent on the extent to which there is already a culture of using and understanding. Traditionally, insurance has had that discipline, so it’s positioned to expand on it. It’s the industry’s opportunity; we’ll see if it adapts quickly enough to take advantage of it.”
In conclusion, there is a general consensus that the CDO and CAO roles are still in their infancy in insurance. In essence, insurers must compound their data assets and build infrastructures which allow for environments of innovation and analytics to survive, and ultimately thrive in today’s increasingly connected world of business. Legacy systems and processes have resulted in the accountability of data exploitation sometimes falling into the hands of more traditional job titles, however, this does not necessarily mean that the responsibilities of a CDO/CAO aren’t being realised.
So must Insurers appoint a CDO or CAO to further their journey of data centricity? Or should the emphasis be placed on the fulfillment of the responsibilities held by such a position?
By Andrew Odong:
Andrew Odong is the Content Director for the Inaugural Chief Data Officer Forum, Insurance 2016 If you wish to learn more about the status of the Chief Data Officer & Chief Analytics Officer within the Insurance sector, join us at the on the 15th September in Chicago, Illinois.
