The Next Generation of Business Intelligence

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The Next Generation of Business Intelligence
CAS 2001 Seminar on Ratemaking Session DAT-9
MODERATOR Al Hapke President, Aspect
Inc. PANELISTS Thomas Chesbrough Founder
Executive Vice President, Thazar Solutions
Corporation James Streff President, Streff
Insurance Services
This slide presentation contains confidential and
proprietary information which is the property of
Thazar Solutions Corporation.
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In This Session

• Current environment
• Lessons learned
• Evolution of next generation systems
• Examples
• Real-world usage and benefits

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Current Environment

• Custom data warehouse and applications
• Lengthy implementation timeframe
• High implementation costs
• High-risk implementation process
• Uncertain and unidentifiable user benefits
• Inability to quantify ROI

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The Next Generation

• Intuitive business intelligence environment that
  enables user to isolate and clarify problems
• Low-risk, low-cost, end-to-end solution
• Complete operating environment
• Pre-packaged insurance warehouse
• Advanced analytic systems
• Built-in insurance metrics
• Proven decision theory and statistical testing
• Data foundation supports rapid, accurate decisions

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Lessons We Have Learned
TraditionalData WarehousingSolutions Pre-packaged Insurance Warehouse AnalyticApplication System
Scope Enterprise-wide Captures all data elements, whether or not they will ever be used in company analyses Focused on business operations Captures data elements vital to analyzing and monitoring company performance
Effort 6-24 months or longer Large-scale custom ETL processes typically lengthens implementation 90-160 days Standardized templates speed up implementation
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Lessons We Have Learned
TraditionalData WarehousingSolutions Pre-packaged Insurance Warehouse AnalyticApplication System
Cost 500,000 depending on company size Short implementation process and subscription-based pricing reduces cost dramatically
Results Large, complex data warehouse that stores all the information a company would need, but end users still dont know how to use the data once they get it Effective system that empowers user to analyze and monitor the effectiveness of their business processes
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The Information Sweet Spot
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Business Intelligence Investment
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The Evolution ofBusiness Intelligence
1985
1995
2001 BEYOND
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Traditional Implementation
CustomETL Process
Client Data Stores
CustomData Warehouse
Custom Data Marts
CUSTOM EXTRACTION
CUSTOM LOAD
CUSTOM POPULATE

• Numerous Resources
• Skilled Craftsman
• High Cost
• Excessive Time
• Opportunities for Mistakes

Custom Data Marts Manual Balancing
Client Responsibility
Custom Work
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New Implementation Approach
MappingTemplate
Client Data Stores
Insurance Warehouse
Insurance Data Marts
Analytic Applications
Client Responsibility
Automated Processes
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Deployment Environments

• Client-site deployment
• Client responsible for
• Operations
• Hardware software costs
• Maintenance support
• Internal resources
• Training issues

• Thazar-hosted environment
• Thazar responsible for
• Operations
• Hardware software costs
• Maintenance support
• Internal resources
• Training issues
• Proven alternative that reduces cost of entry
• More ROI, more quickly
• Remote access via Internet

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User accessvia Internet (if using
Thazar-hosteddeployment)
Thazar-hosted Deployment
Client-siteDeployment
USER

• INSsight Shell
• Business Intelligence Subscription Shell
• Subscription Mgmt. Database / API

• Clients INSsight Shell
• Business Intelligence Subscription Shell
• Subscription Mgmt. Database / API

• Thazars WebsphereApplication Server
• Java Server Pages (JSP) Engine
• Servlet Engine
• Enterprise Java Bean Engine

• Clients WebsphereApplication Server
• Java Server Pages (JSP) Engine
• Servlet Engine
• Enterprise Java Bean Engine

• Thazars Database Server
• Application Specific Data Marts
• Application Registry
• App. Relationship Mgmt System
• Security Database

• Clients Database Server
• Application Specific Data Marts
• Application Registry
• App. Relationship Mgmt System
• Security Database

Data Store, Warehouse, and Marts
Data Store, Warehouse, and Marts
Data Transfer(if using Thazar-hosted deployment)
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The Next Generation

• Complete solution with seamless integration
• Analytic applications answer specific business
  function questions and guide user through
  analysis
• Answers four basic questions
• Who
• What
• When
• Where

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Intuitive Applications

• Users dont have to know
• Complex data structure
• Technical data element name
• Granularity of data
• SQL knowledge
• Users can easily view information from many
  angles and analyze at deep levels
• Seamless, integrated applications support
  complete thought process from discovery through
  analysis

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Simple Interface, Complex Query

• Not just queries, but proven statistical analysis
• Profile Monitor Chi Square algorithm
• Retention Monitor unique loyalty matrix
• Loss Monitor Retention Monitor leading edge
  customer aging process
• Simple interface, but complex query underneath
• One-click summary launches 32 queries to obtain
  LOB attributes for new existing business in
  Profile Monitor

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INSsightBusiness Intelligence System
ANALYSESQUERIESSCORES
ANALYTIC APPLICATIONS
SCORING MODELING
PORTALS
BENCHMARKING
MONITORS
INSURE MARTS
INDUSTRY-STANDARD NAMING CODES
INSURANCE WAREHOUSE
STANDARD TEMPLATE
LOAD TRANSFORM EXTRACT
DATASTORES
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Success Criteria for Web-based Business
Intelligence

• Performance
• Scalability
• Low-cost administration
• Security
• Pricing

• Ease of use
• Interactivity
• Availability(anywhere, anytime)
• Functionality
• Architecture

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An Actuarys Perspective

• Data is accessible and accurate
• Eliminates many clerical tasks
• Allows work at the highest level possible
• Produces valuable business intelligence in
  operational areas
• Produces more surgical solutions more efficiently

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A Products Hidden Costs

• Actuaries can calculate product price to
  compensate for added costs due to poor management
• Many factors add cost to the product
• An undisciplined distribution force
• Customer disloyalty
• Underwriting poor risks
• Adverse selection adds cost to the company
• Actuaries need to apply their skills to eliminate
  added costs to keep product prices as low as
  possible

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Defining A Good Solution

• Measures behavior that produces good results
• Includes responsive formulas for early detection
• Isolates measurements on any subset of
  information
• Follows stream of logic in solving problems by
  linking applications
• Scores performance and sets alerts

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INSsight Applications

• Retention Monitor measures retention trends
• Loss Monitor measures underwriting excellence
• Profile Monitor measures discrete changes in a
  companys book of business
• Claim Monitor measures claim excellence
• Ratemaker supports the pricing function
• Prophet Portal provides guided query analysis

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Retention Monitor

• Loyalty has a big economic reward
• Companies with high customer loyalty are the most
  profitable and can sustain the best growth rates
• Measures customer and agency loyalty
• Measurements can be calculated by month of issue
  or by calendar month

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Loss Monitor

• New business is difficult to underwrite
  profitably
• Losses early in a policys life are balanced by
  profits later in the policys life
• Underwriting losses on new business need to be
  balanced by profits on tenured business

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Profile Monitor

• Measures the characteristics of policies
• Identifies adverse selection
• Measures the direction of a book of business

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Claim Monitor

• Designed as a comprehensive (holistic) system for
  measuring claims excellence, including
• Accurate claims reserving
• Claim cost containment
• Control of claim expense
• Recovery of salvage and subrogation
• Proper pace for claim closure

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Ratemaker

• Produces a complete set of ratemaking exhibits
• Enables actuary to interact with the application
  in regard to
• Claim trend factors
• IBNR
• Premium drift factors
• Large loss loadings

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Ratemaker

• Ratemaker will include
• Rate Indication Worksheet
• Analysis of Catastrophe Losses
• Calculation of Loss Trend Factors
• Analysis of Rating Parameters such as Increased
  Limit Factors
• Analysis of Losses by Layer of Loss
• Analysis of Time Lags and Calculation of
  Investment Income

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Prophet Portal

• An extremely versatile, all-purpose application
• Allows actuary to focus on almost any inquiry
  imaginable, including options for defining loss
  ratio, exposures and time intervals
• Tremendous power to isolate measurements on any
  subset of geography, rating parameter,
  distribution entity, and product characteristic
  that arise from the questions of who, what, where
  and when

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Summary

• Thazars next generation business intelligence
  systems gives actuaries more powerful tools
• By providing an accurate repository of data
• By giving logic to follow logical thought process
  in problem solving
• By incorporating more business intelligence into
  the decision making process
• By allowing the actuary to concentrate on
  business issues not data issues

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See INSsight in action!Please contact us to
participate in one of the following online
demonstrations
? Thurs., March 22, 9 a.m. CST? Thurs., March
22, 1 p.m. CST? Wed., March 28, 9 a.m. CST?
Wed., March 28, 1 p.m. CST
Private demonstration times also available. T1,
Cable, or DSL Internet connection required.
888.527.7866 www.thazar.com
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