Business Intelligence Solutions for the Insurance Industry DAT – 13 Data Warehousing Rasool Ahmed

©2000 Thazar Solutions Corporation Business Intelligence Questions : BI - What is it? What would I do with it? Why do I need another system to do it? BI supplier selection evaluation criteria.

©2000 Thazar Solutions Corporation Business Intelligence Executive Analysis Query Reporting Data Mining Operational Data Sources Claim Sales & Marketing Financial Underwriting Third Party Data Other Int. Systems Access Load Transform Extract Data Warehouse Multi-Company Multi-Line Multi-Source Multi-Dept/Function Transaction Level Policy J Brown Female July 20, 1945 Financial Consultant Claim Judy Brown One Claim Filed CWP MVR Brown, Judy Ann Two Tickets 1999 One DUI External Judy Jackson Good Credit History Income > 100,000 Judy Ann Brown Female July 20, 1945 Financial Consultant Good Credit History Income > 100,000 One Claim Filed Closed Without Payment Two Tickets 1999 One DUI

©2000 Thazar Solutions Corporation BI - What would I do with it? Interactive Intuitive Mgt Review Exec / Mgt Profiling Detailed Analyses Loss Triangles Risk Assessment New Business Exposure Evaluation Data Modeling Pattern Recognition Predictive Modeling Risk Scoring “Fraud with 85% accuracy” “…predict with 82% accuracy those customers that Will cancel their policies.” “… The special Investigation Unit can now prioritize and catch 66% more fraudulent claims per referral.”

©2000 Thazar Solutions Corporation What can do with it? Executive Browser

©2000 Thazar Solutions Corporation

Why do I need another system to do it? Data organized for OLTP, not analysis Inability to slice and dice – geared for management reports Unintelligible coding structures; no meta data Not a complete picture (multiple systems); can’t merge Inability to augment data 87% of all insurance master files are non-relational Inability to profile trends

©2000 Thazar Solutions Corporation Business Intelligence Executive Analysis Query Reporting Data Mining Insure Marts™ Corporate Detail Corporate Summary Line of Business Insurance Warehouse™ Policy Claim Rating Data Sources Claim Sales & Marketing Financial Underwriting Third Party Data Other Int. Systems Reinsurance And more Access Load Transform Extract Aggregate Information source data provided by insurerInsight knowledge & insight gathered by insurer solutions provided by Thazar

©2000 Thazar Solutions Corporation Business Intelligence How Much? 199X 2000 $$$3+ M 1/4% NWP Time> 3yrs 3 – 5 months FunctionReportsProfiling/Predictions

©2000 Thazar Solutions Corporation Business Intelligence For Example…….: Fraud Detection Losses are 70% of NWP; 10-20% of Losses are Bad Faith Identifying <4% of Bad Faith claims pays back cost of DWH Retention Poor Average Good 25% 35% 45% (after 4yrs) |  (2%) Loss Ratio |  (1 ½%) Loss Ratio Increasing Retention by 1 ½% pays back cost of DWH (reduced losses only) New Business Costs of Sales can vary from 5% to 20% of NWP Moving 5% of business to channel that is 5% more efficient pays back cost

©2000 Thazar Solutions Corporation Better Quality of Data 35% Better Understanding of the Business 20% More Timely Decisions 30% Exploit New Market Opportunities 15% Meta Group Survey of 300 Companies Implementing Warehouses Over 400% ROI in less than 3 years! Why Companies are Doing Business Intelligence

©2000 Thazar Solutions Corporation Revenue Growth / Expense Control Questions You Need Answered Now Questions You Have Not Thought About Acquisitions Why Companies are Doing Business Intelligence

©2000 Thazar Solutions Corporation Personal Auto – Retention Analysis Policy Holder Characteristics Loss Attributes Policy Attributes Distribution Analysis Dimensions

©2000 Thazar Solutions Corporation Homeowners – New Business Analysis Policy Level Analysis Risk Characteristics Analysis Home Feature Analysis Time Views

©2000 Thazar Solutions Corporation Engagement Overview wk 1-2 Plan / Organize wk 3-4 Data Analysis Workshop wk 5-7 ETL Development wk 8-9 Test & Balance wk Load Warehouse & Marts wk 12 Go Live

©2000 Thazar Solutions Corporation Implementation Roles / Responsibilities BI Solutions Provider Project Manager Business Analyst* Data Analyst* Technical Analyst * Insurance knowledge & experience is critical Client Project Manager Business Analyst Data Analyst

©2000 Thazar Solutions Corporation Supplier Both You Executive Sponsorship & Vision Functional Executive commitment Information Systems Team involvement BI Insurance Experience & Methodology Pre-defined Models, Templates, Marts & Executive / End User Browser Critical Success Factors... Critical Success Factors...

©2000 Thazar Solutions Corporation Critical Success Factors... Supplier Both You Supplier Both You Scope & definition study - phased Implementation Scope & definition study - phased Implementation Expectations & Results understood Expectations & Results understood Business & I/S experts to implement Business & I/S experts to implement Training and skills transfer Training and skills transfer Easily Supported & Maintained Easily Supported & Maintained Add additional departments, enhancements Add additional departments, enhancements & applications & applications

©2000 Thazar Solutions Corporation Lessons Learned Don’t: build “boil the whole ocean” oversell to end-users build something that can’t be maintained and extended Do: start small “phased” - prioritization by LOB ensure data has integrity and is balanced define measurable objectives Keep At It !!! deliver “baseline” results early & continue to build

Rasool Ahmed Thazar Solutions Corporation Rasool Ahmed Thazar Solutions Corporation