Towing Data Analytics?

       

Data Analytics-driven Telematics holds a bright future for CAA

        Winter 2009, when the dispatching unit of CAA South Central Ontario (CAASCO) was getting bombarded with calls from members for car assistance. It was a brutal snowstorm paralyzing half the GTA. GTA had experienced the highest casualties related to automobile in that year[1]. It was also the most financial drain for the company as property and auto claims depleted our pool of reserves. By end of 2009, CAA SCO (South Central Ontario) was in a loss of $29 m. Tethering into bankruptcy and by 2013 in a surplus of $ 1.9 m. Miracle isn’t it? What magic wand did we acquire that turned our fortunes? Ironic how we look elsewhere for solution when the solution exists right in front us the whole time: data and people.

In corporate circles, executives vouch for data being akin to gold. I have a different tale to tell: Data has the potential to be gold. Data is worth stack of hard drives collecting dust in company Data Centers unless we churn data into gold!

“Leveraging customer Data and doing some simple eye-balling was the need for the hour ” Jay Woo - President and CEO CAA SCO

 A home owner claiming for sewerage repairs for three consecutive years without Premium go up a cent1. An auto insurance policy holder heaping demerit points for impaired driving and still manages to retain the same Premium by threatening to dessert us. Under pressure from increasing competition, we recognized that our viability and sustainability depended on taking a hard look at analytics at each of our pillars – customer, operations and finance.

Jay Woo, President and CEO of CAASCO said: “Leveraging customer data and doing some simply eye balling was the need for the hour.” We had reached our inflection point. We identified our ‘Analytically Challenged’ framework and processes and re-evaluated and aligned our strategy to being customer-focus and data-driven one.
     
Business Intelligence and Data Analytics was the key component in reaching our goal and thus keeping us afloat. We did cherry-picking in terms of whom to target for our home and auto insurance. We segmented the market and focused on the piece of a pie that we were most interested. The pilot project was named ‘Risk Segmentation’ which was put in place in 2010 to increase our market share.

Enterprise-wide KPIs were laid out by business which enabled us to exploit those areas in our ‘analytical sandbox’ or ‘Center of Excellence’ for analytics. Same methodology and processes were scaled to other product lines and business units within the organization. We were able to minimize our loss ratio and by 2013 we were leading insurer with the least loss ratio. This by no means was a flash in the pan, detailed and articulate analytics enabled us to see value hidden in the data and realize its true potential via analytics.

By transforming insights into actions, we are now able to prioritize our future investments. We are now aiming to being ‘Analytical Innovators’ from ‘Analytical Practitioners’. This will enable us to be achieve competitive differentiation as well as fine tune our market segmentation. Adopting analytics made us turn challenges such as customer-retention, anti-fraud practices and misaligned marketing campaigns into opportunities. True strength of our analytics will be tested when we start gathering even more data ‘gems’ from our telematics this year (We have recently launched our UBI-tool called Telematics last year). This will shift us from being in ‘What happened” and “Why it happened” mode to “What is happening now” mode. The amount of data we will collect and to realize the data’s value is the essence of data analytics. To exploit the ever-increasing data with degree of rationale in real time is where we will be focusing our attention to. Driven by analytics, we can provide BPO (Best Product Option and BPA (Best Product Action) to the customer.

Data Analytics is by far not the domain for growth seeking companies only. Established companies can leverage data analytics in seeking efficiency, seeking new markets or even fine tuning their strategy based on analytics. Data analytics should be ingrained in a company’s DNA, driving forward its strategy and implementing its goals. Over-time, companies will witness data-driven decision making branches out across companies cementing more value and trust in analytics 

 As I write this article, one should be cognizant that the data is being accumulated at an exponential power and the ability to churn data into gold is the bottleneck. To identify ‘strategic information’ from ‘noise’ that is being flooded from structured and unstructured sources and mold them into ‘single version of truth’   is only half the battle. To ‘predict’ with reasonably amount of accuracy , mitigating risk , providing timely customer engagements are some of the opportunities that will drive our company forward – after all we are in the business of ‘making bad days good  and good days better’ .

[Disclaimer - The article above was written for a Management Course about Analytics practices in current workplace. The thoughts are of my personal and does not represent the company's (CAASCO) view points. Many details have been omitted from the blog.]

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[1] CAASCO Portal