SOA Health Meeting - June 2012 Business Case for Business Intelligence Kevin Pledge [email protected] 416 949 8920 @kevinpledge http://ca.linkedin.com/in/kevinpledge 

Kevin Pledge • CEO and Co-Founder of Insight Decision Solutions • Chair of the SOA Entrepreneurial Actuaries Section • Member of working group on Actuaries in Business Analytics [email protected] • 416 949 8920 • @kevinpledge • http://ca.linkedin.com/in/kevinpledge 

Agenda Kevin: Examples and case studies of BI at work Neil: Developing trends in semantics and big data 

What is Business Intelligence? 1) Combination of data management and analytics 2) A database managed by IT 3) The ability for an organization to take all its capabilities and convert them into knowledge 4) An oxymoron 5) All of the above 

Typical BI Architecture Data Warehouse / OLAP Server Presentation Server Users Metadata Data Store Integrated Systems e.g. valuation system ETL ETL Source systems But others are possible…. 

‘single version of the truth’ 

Reality Check data definitions, data cleansing, aggregations, normalizing, de- normalizing, rationalizing, extracts, transformations, translations, data dictionaries, restructuring, conversions, Not worth anything if don’t have a use for it 

consistent cleansed data for actuarial Before: Separate data extracts for experience studies, valuation, financial reporting schedules Separate rules applied for experience studies, valuation, financial reporting schedules • Date of termination in the future, policy status terminated • Terminated policies with active coverages • Change of primary insured’s gender on joint life plans • Inconsistencies between age, DOB and issue date • System conversion errors $20m reserve for poor quality data 

consistent cleansed data for actuarial After: Single extract, single set of rules Reduction in head count, but increased number of actuaries No year-end panic Increased work capacity – more frequent reporting, more analysis Increased responsibilities, need to develop new skills Released $20m reserve for poor quality data And… I could never work in a traditional actuarial environment again 

Improving Analytics sales reporting salesforce analysis accounts underwriting analysis claim analysis inforce demographics valuation analysis valuation data extracts experience studies earnings-by-source actuarial involvement analysis frequency retention analysis customer analysis 

Improving Analytics Traditional Approach BI Approach Prepare Model / Calcs Apply Data Report Prepare Data Model / Calcs Analysis 

Improving Analytics: Real Life Example Medicare Supplement rate increases $1bn premium income ~80% of business applied for increases Assuming 6% increase 80% x $1bn x 0.06 x 1/12 = $4m 20% x $1bn x 0.06 = $12m 

Improving Analytics New frontiers Hard to justify ROI Potentially highest ROI 

Marketing Understanding your agents and customers… Coverage Agent Policy Claim Group Customer Sales Team Office Coverage Agent Policy Claim Group Customer Sales Service 

Underwriting – Predictive Modeling Automate for faster, more consistent decisions • Reduce cost, NTU’s • Process to improve • over time 

Claim Analysis Meaningful attributes (ICD codes) Alerts Claim transition (LTC) Testing new procedures such Wiley Protocol 

Extend with Collaboration 

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Analytical Competitors 1. Senior executives strongly advocate analytics and fact-based decision making 2. Widespread use of descriptive statistics, predictive modeling, and complex optimization techniques 3. Analytics used across multiple business functions 4. Enterprise-wide approach to analytical tools, data, and process 

Is there really a magic recipe? Management Support Widespread and in multiple business areas But…  Does not need to be complex  Coordinated, not centralize control 

Opportunities for Actuaries in Business Analytics As part of the SOA's strategic objective to create and promote new areas of practice, this initiative will determine whether significant opportunities exist for actuaries in business analytics and, if so, identify projects the SOA should undertake to explore and develop these opportunities. Session tomorrow Actuaries in Advanced Business Analytics 

Summary • Consistent cleansed data • Improve analytics – Accelerated – More depth – Lower cost • Extend analytical decision making 

Thank You Kevin Pledge [email protected] 416 949 8920 @kevinpledge http://ca.linkedin.com/in/kevinpledge