Risky Business: How can you Manage Risk if your Data is Wrong, Low Quality or Simply Impossible to Find?
For those working in the complex world of insurance, pondering the best ways to manage the risks associated with poor data and data management protocols is a fruitless task. Trying to ‘manage’ the ever-present and growing risk is in itself a substantial risk that is not worth taking.What is worth pondering, is how you might mitigate the risks instead, by improving the quality of your data, and the efficiency and robustness of your data management tools.Sound like hard work? Let’s consider the alternative for a moment.
What is the Business Impact of Bad Data and Poor Data Management?
Having low-quality, inaccurate data and inadequate data management protocols in the insurance sector poses various risks, including:
1. Financial Loss
Low-quality data may lead to inaccurate risk assessments during underwriting processes. This could result in mispricing premiums, leading to either undercharging or overcharging customers, which could impact your profitability. Additionally, poor data management protocols can lead to inefficient operational processes such as policy administration, billing, and claims handling. Increased administration costs plus the loss in productivity will ultimately impact upon your bottom line.
2. Unhappy Customers
When your data is incomplete, inaccurate or hard to locate, this will have a knock-on effect on your claims processing workflow. Claims may be delayed or denied due to the inability to validate information, leading to dissatisfaction among policyholders. You may even find yourself with a legal dispute on your hands.. Throw in the billing errors and poor customer service experiences that come as a result of low quality data and eventually customer trust and loyalty will erode, leading to churn and negative word-of-mouth.
3. Regulatory Non-Compliance
Insurance companies operate in a strict regulatory environment relating to data protection, privacy, and reporting. Given the complex, sensitive and highly confidential nature of the personal data possessed and processed by insurers, Data Subject Access Requests (DSARs) are becoming more and more prolific within the industry. Inadequate data management may result in non-compliance with regulatory law including DSARs, leading to penalties, fines, and reputational damage.
4. Increased Vulnerability to External Threats
Insurance Fraud is on the rise, and low-quality, badly organised data can provide a perfect place for fraudulent activity to hide. Without robust data management protocols, insurers may struggle to identify and prevent fraudulent claims, resulting in financial losses. Cyber breaches and cyber security threats are also a huge worry for insurers. The sensitive data you hold makes the sector an attractive target for cyberattacks. Out of control data systems practically offer an open door to cyber criminals, and a breach can lead to financial losses, reputational damage, and legal liabilities.
5. Loss of Competitive Advantage
Datafication, enabled by technologies such as AI, ML, big data analytics, and predictive analytics, has transformed the global insurance industry. In theory, this means insurers can collect and harness data to optimise their services, offer a more personalised customer experience and reduce claims. In practice, if you are not storing and managing data well, you cannot extract actionable insights and use them to drive the business forward. This leaves your more data savvy competitors to snap up your share of the market.
Embrace Data, Mitigate Risk, boost your Bottom line.
Rather than accepting and attempting to manage these risks, insurance firms should better position themselves to embrace the abundance of opportunity that data brings. To do this, high quality data and robust data management systems and protocols are crucial.
A platform like SimSage isn’t just a ‘system’, it is a holistic approach to your entire data asset estate, offering auditing, cleansing, search, and data processing capabilities. Built with insurance professionals in mind, SimSage is a data management powerhouse that ‘insures’ you boost your bottom line, delight your customers, secure compliance, shut down the cyber threats, and embrace datafication.
Get in touch with us today to explore your next step with SimSage.
