The nature of the information held by insurance firms means that many are too nervous to implement new software that involves migrating data, says Stuart Favier, Client Manager Insurance, Northdoor plc. What’s the solution?
Data is, and always will be the insurance industry’s most important asset. Data allows insurers to understand their customers, provide better experiences, and improve retention rates. Insurers can also use it to more accurately underwrite, price risk and incentivise risk reduction.
It is easy, therefore, to see why there is such nervousness within the sector over the movement of such data from one system to another. The loss of any of this can cause huge problems in both the day-to-day running of the business and regulatory requirements. Indeed, the nature of the data held by insurance companies means that any data loss or breach can have huge consequences.
So, with all of this in mind, why would insurance firms look to migrate data in the first place?
Reasons for moving data
There are a few reasons for moving such sensitive data. One is the replacement of legacy systems. In an increasingly connected, digital age the insurance sector has had to work hard to update systems to reflect the changing demands of customers and the requirements of an increasingly complex regulatory environment. Any move from a legacy system, where data might have been collected for years and stored in a set way, to a new system is always going to have risks, but the need to keep up with an ever-changing environment is critical for the success of insurers.
Another reason for migrating data can be a result of an acquisition or being acquired by another company. Merging data landscapes from sometimes entirely different systems can be a huge and complicated task. There are a number of challenges especially when the separate systems have no way of communicating with each other.
Both of these scenarios represent real challenges for businesses. It is perhaps understandable, therefore, that some companies are nervous about undertaking such tasks. Research has shown that one of the major reasons for IT project delays and cancellations is unengaged project sponsors and stakeholders. Without getting the C-suite and other key influencers within the business on board, data migration projects are always going to fail. Without decent communication and engagement, senior decision makers tend to shut down or delay such projects rather than begin the daunting task of shifting data.
The results of poor data migration practice
The C-suite are shutting down such projects because poor data migration practice can have a huge impact on a business. For a start, the loss or the corruption of data means that not only are companies left without important information but potentially leaves businesses facing a regulatory or PR nightmare.
If there is corrupted or poor data quality as a result of data migration, then businesses simply cannot make reliably informed decisions. Reports and metrics are only as good as the data feeding them, if there have been mistakes during the course of migration and the data being used is not accurate, it cannot be giving decision-makers a realistic picture.
Of course, once these issues have been identified they have to be fixed. This results in other negative impacts including extended downtime. Downtime itself then has knock-on effects, with productivity and profit both impacted, as well as the faith team members have in the new solution.
All of this has the potential to be ramped up into a regulatory issue for a business. In a sector that is so highly regulated, insurance firms have to ensure that any data migration runs smoothly and effectively. Any of the issues identified above can have a regulator immediately take a close look at data management and use within a business.
What is the key to good data migration?
Planning and proper consideration can ensure that a data migration project can be successful and therefore, avoid many of the negative consequences of a poor project.
One of the key elements to a successful migration is to have a full understanding of what data you have and where it sits. For many insurance firms, this is a real problem. For one, the nature of insurance means that huge amounts of data is collected every day and this has continued for decades. Without a full understanding of what you have and where it is there is real potential for migration to go wrong.
Aside from this initial but hugely important point, there are a number of elements to consider at the beginning of a data migration project. These include:
· Data integrity
· Business impact
· UX (and the potential impact on UX)
· Data assessment and quality
With planning the critical part of a migration process and with so many elements to consider before embarking on the journey, it is crucial that the entire process is managed carefully. The impact, as we have discussed, of not doing this can be potentially disastrous for insurance firms.
Turning to IT consultancies for help
With so many elements to consider and plan for, many insurance firms are turning to IT consultancies to help navigate them through the data migration process.
This means that the entire journey, from the identification of what data there is and where it sits, to ensuring data quality after the migration is handled by experienced professionals who have specific experience in the insurance sector.
Not only does this allow internal IT teams to focus on other, business-critical elements, but also helps to ensure a smooth migration, with buy-in from all stakeholders. It means that insurers can be confident in the quality of the data they are receiving and using after the project has finished and that they can make the very most of the new system.
Perhaps most importantly for the insurance sector, it means that companies can be confident that they remain within the parameters of a complex regulatory landscape.
The positives of moving from legacy systems or incorporating data from acquired companies are numerous. Senior decision-makers should not be putting off such migrations because of a fear of the unknown or risk aversion. Working with third-party experts can take much of this uncertainty away and the reassurance that your data is in good hands, ensuring the quality of the data and your adherence to regulation.