As insurers continue to develop and deploy business analytics solutions of increasing sophistication, they need to remain cognizant of the promises and limits of these technologies.

Speaking at the Insurance Accounting and Systems Association 2010 Educational Conference and Business Show in Grapevine, Texas, renowned writer Malcolm Gladwell told attendees that the very nature of the problems business and government leaders are asked to solve is evolving.

“The problems that require ingenuity have undergone a fundamental change,” he said.

Gladwell, author of best sellers The Tipping Point and Blink, said that the shift was from puzzles, which are linear and are solved by applying additional information, to mysteries, which are more complex and often defy resolution because too much information clouds the minds of those tasked with solving them.

In a historical analogy, Gladwell cited the Cuban Missile Crisis, which was averted when the CIA planes took photos over Cuba and revealed the weapons’ existence. To the contrary to head off the attacks of 9/11, various bits of information from myriad federal agencies would have to have been connected in advance to thwart.

In a similar sense, in an age of data warehousing, insurers are awash in data and need to synthesize various data streams to arrive at positive business outcomes. “The world of mysteries requires more analytical resources,” he said.

Another trick, Gladwell said, is to simplify.  He cited the example of an emergency room that was able to better treat heart attack victims by winnowing the number of variables it used to access patients with chest pains to four. “You need to narrow variables to turn mysteries into puzzles,” he said.

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