Eight Practical Lessons for Insurance Data Warehousing

The benefits of insurance business intelligence are clear ­ improved pricing strategies, new market development, retention of profitable customers and increased claims efficiency. Though the benefits are evident, visionary insurance executives who have implemented data warehouses have been tested by the fires and many lessons have been learned. Following are eight practical lessons that every insurer should know prior to implementing a data warehouse.

1. Choose a corporate sponsor who understands the needs and uses of the data warehouse and can push the project along.

2. Involve your end users when defining the requirements of the data warehouse. They typically know what information needs to be extracted for decision making.

3. Don't reinvent the wheel. Either use proven technology on the market or consult with peers.

4. Cleanse-Cleanse-Cleanse. This cannot be said enough. Take great care when cleaning the data. What is the purpose of the data warehouse if it isn't accurate? Also, don't ignore missing data. Missing data could be very valuable and should not be overlooked.

5. Develop an active data warehouse. If the warehouse isn't dynamic, it will soon become stale and unused.

6. Think globally, but act locally. If a large, enterprise-wide data warehousing project is out of the question, start small with line of business, operating company, etc. But keep in mind your global enterprise needs. Additional areas can be taken on using the same business intelligence methodology, but this is only possible if an overall enterprise architecture is present.

7. Use a separate facility to run data analysis. Many have attempted to run on the same mainframe or server containing their operational systems. The end result is taxing to both systems and reduces the benefits of decision support.

8. Educate the end-user audience of the features and benefits of the business intelligence system. The philosophy of "build it and they will come" does not apply here. Insurers must show how the system affects the decision-making needs of the entire company.

Insurers are turning back to their core competencies and have to think "out of the box" to keep ahead of their competitors. Insurance companies that build a comprehensive data warehousing environment that supports the strategy and tactical plans of its business units will generate the competitive advantage needed for growth.

Editor's Note: Thomas Chesbrough's article "Data Warehousing: Redefining the Competitive Landscape of the Insurance Industry" will be published in the October 15 issue of DM Direct, the free electronic newsletter published twice each month by DM Review.

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