Insuranceciooutlook

Data-Driven Gold Rush is on

Matt Nash, VP Venture Studio, WPS Health Solutions

Matt Nash, VP Venture Studio, WPS Health Solutions

Domain expertise is the next gold rush. Companies who quantify and commoditize their industry-specific knowledge (domain expertise) and their own data stand ready to take control over a new category of products made possible by a technological inflection point we are only beginning to understand. The ability to fairly assess the value of the ground you are standing on or even “self-extracted gold” will be the determining factor in the long-term success or failure of organizations worldwide.

Thinking in Data

Future health insurance markets will be controlled by those who think in data. The business of claim management, risk assessment, and finance has always been data-driven, but the interpretation of that data and application of the truths it represents have been human work. Human work is error-prone, slow, expensive, and worst of all temporary. The market for reliable human labor capable of insightful data interpretation is lean. Many domain experts are on the brink of retirement and so their expertise leaves with them. These specialists leaving the workforce is an approaching ‘event horizon,’ beyond which complex business logic and operational aptitude in interpreting data will disappear, never to be recovered. New cohorts of labor will not consider their employer a lifelong investment unless employers consider them the same which is an expensive proposition. To solve for these problems, and reduce costs, savvy leaders have begun thinking in data—seeing their non-traditional tech companies as new data companies. This is the next quest for gold; seeing data as a real asset and using this data as a resource can drastically reduce the expense of predictive and operational analytics, all while avoiding the transitory nature of human-based expertise.

Uncovering data assets in non-traditional places

Data companies, or more broadly technology companies, see things like domain expertise as a future technology asset--health insurance companies should too. It is well-known that quantifiable, discrete, well-defined rules can be preserved and built into technology systems. Most organizations have been chipping away at this truth for decades, gradually moving more expertise into logic as it is able to be extracted, and as specialists yield their secrets. These organizations fall short when rules, or the realities underlying them, change fundamentally in a short timeframe or when rules are too nuanced, vast, or subjective to be ordered and written as code. The recent surge in analytics and machine learning caused by inexpensive and ubiquitous processing power has created an avenue to change. These tools provide a mechanism to transform seemingly intractable or volatile rule sets and bodies of knowledge into maintainable technology assets. This change is so fundamentally disruptive to industry as to flatten the playing field. Traditional monolithic technology vendors lack the domain expertise to scale the technology effectively horizontally across multiple industries, while the abundance of open-source tools has provided niche experts the ability to develop their own proprietary model frameworks and services.

"By assessing and structuring analytical data assets for future scale, piloting programs and products around cognitive technology insights, companies must revolutionize self-perception as a technological entity"

Outsourcing is not always the solution

Outsourcing the effort to build analytics and cognitive technology may be worse than a simple waste of capital. It may also be inadvertently training future competitors to distill hard-fought organizational domain knowledge into artifacts, the rights to which may be dictated by unfavorable contractual terms and conditions enterprise leadership are not equipped to understand. As industries mature and market leaders emerge over the coming decade, insurance companies which have begun their own practice will be positioned to engage the types of service and management that are best yielded to technology specialists, including production monitoring, efficient scaling, and interpretation, or prototyping of new research. The work to prepare for this should already be underway.

By assessing and structuring analytical data assets for future scale, piloting programs and products around cognitive technology insights, companies must revolutionize self-perception as a technological entity. This is a generational inflection point where the core product within an industry is fundamentally changing. In the case of insurance, this means policy administration expertise and its surrounding services (risk assessment, predictive analytics, validation, fraud detection, and pricing) distilled to data, software, and services as modular products. This will demand a revolutionary re-examination of talent sourcing, team cultures, workplace attitudes, and policy on the part of every major insurer.

Those who make the pivot will control the market; those who lease their future will watch as new, unexpected leaders emerge, heavy with riches taken from their domain. How organizations respond to and harness the protean power of emerging technology will determine if they are disrupted or prove to be disruptors themselves.

Weekly Brief

Read Also

Stepping Up the Game of Health Insurance

Stepping Up the Game of Health Insurance

Tim Matthews, Director, Medicare Sales, PacificSource Health Plans
Lessons Learned in Building and Operationalizing an Enterprise Data & Advanced Analytics Capability

Lessons Learned in Building and Operationalizing an Enterprise Data & Advanced Analytics Capability

Sukanya Lahiri Soderland (Chief Strategy Officer and SVP, Strategy, Innovation, Analytics and Consulting) and Himanshu Arora, (Chief Data and Analytics Officer) Blue Cross Blue Shield of Massachusetts
Why Is Insurtech So Hard?

Why Is Insurtech So Hard?

Aviad Eyal, Co-Founder & Managing Partner, Entrée Capital
Legacy Systems: Why Insurance Companies Are Talking About Them

Legacy Systems: Why Insurance Companies Are Talking About Them

Randy Boston, Director, Service Billing Operation Administration, Aflac
3 Steps To Identify And Prevent Duplicate Payments

3 Steps To Identify And Prevent Duplicate Payments

Luis Juarez, Director of Accounts Payable, FirstService Residential (TSE: FSV)