P&C insurance companies: Get the most out of your MDM investments

Jason Bihun

Jason Bihun, VP of Sales

P&C insurance companies: Get the most out of your MDM investments

Overview

MDM solutions cost a lot of money and take a lot of effort to implement, but they are worth it to gain the elusive “single view of the customer.” However, every MDM solution on the market flags anywhere from 10-20% of customer records as potential duplicates that it cannot definitively match to an existing customer identity. These potential duplicates must be manually reviewed and resolved, or simply ignored. Either way, they significantly erode the business cases that justify having the MDM in the first place.

Luckily, Verato Auto-Steward™ can help companies get the most out of their MDM investments. It is a cloud-based plug-in for MDM technologies that programmatically and automatically resolves the difficult potential matches that MDM technologies cannot make on their own. For example, a recent customer was able to reduce the number of potential matches in its MDM by millions within weeks of integrating Verato Auto-Steward.

Read on to learn more. And see how much data stewardship is costing your organization with our stewardship calculator.

MDM Solutions Are Really Expensive, but Really Worth It

Since the late 1990s, traditional property and casualty (P&C) insurance companies have recognized the value of their customer and prospect data and have focused on wrangling this data to improve their operations and their competitiveness in the market. These companies have invested heavily in Master Data Management (MDM) technologies to aggregate and unify this data to gain the elusive “single view of the customer.”

The cost of MDM solutions is significant both in the capital to purchase the software as well as in the process and resource changes to support its deployment. But P&C insurance companies have built business cases related to gaining a single view of the customer that more than justify the cost of purchasing and deploying MDM solutions.

Related Content: Learn how to automatically resolve “suspect duplicate” tasks in your MDM with a simple plug-in

Some of these business cases focus on service improvements to the customer to improve acquisition and retention, while others focus on improving efficiencies in claims and service processes or reporting on customer-related activities and acquisition costs. As one example, a P&C insurance company that deployed an MDM solution to improve customer acquisition was able to increase its products-per-customer from 1.2 to 1.4, which resulted in tens of millions of dollars of more premiums.

A Costly Choice: Data Stewardship vs. “A Single View of 80% of Your Customers”

While MDM solutions can be worth every penny, they force P&C insurance companies to make a costly choice: either invest hundreds of thousands of dollars and an enormous amount of manual effort into a data stewardship program, or gain a single view of only 80% of their customers and thereby erode the business cases of having the MDM solution in the first place.

Let me explain.

MDM solutions face enormous challenges in accurately matching all of a company’s customer records and associating them with the correct customer identities. This is because MDM technologies use customers’ demographic data to make these matches, but demographic data is notoriously error prone, out-of-date, incomplete, or inconsistent across customer records. And no MDM matching algorithm, no matter how sophisticated, can overcome such poor-quality data to automatically make all of the correct matches.

Because of this, every MDM solution on the market is programmed to flag “potential matches” whenever it cannot automatically determine whether two customer identities match. These potential matches occur at such a high frequency that their volume typically ranges from 10-20% of the overall customer population.

These potential matches force P&C insurance companies to choose between (A) creating a data stewardship program whereby each potential match is manually reviewed and resolved by an employee, or (B) leaving the potential matches as duplicates in their MDM.

The first option can cost hundreds of thousands of dollars per year for many years—and that’s after the costs, headaches, and organizational challenges of creating a data stewardship program in the first place. And even if you create a data stewardship program, not all of your potential matches will be resolved right away, delaying the business value of gaining the “single view of the customer.”

Related Content: Learn how to automatically resolve “suspect duplicate” tasks in your MDM with a simple plug-in

The second option erodes the business cases a company has created around obtaining a single view of the customer: if 20% of customer records are duplicates, then one in five interactions with a customer will be sub-optimal; the service and sales efforts leveraging a single view can only provide value one out of five times; analytics reports will be skewed by as much as 20%; and you’ll only be gaining a “single view of the customer” for 80% of your customers.

Ultimately, the planned business value of having the MDM solution degrades or disappears relative to the costs of having a stewardship program or of only gaining a single view of 80% of your customers.

Get the Most out of Your MDM Investment with Verato Auto-Steward

Verato offers a simple solution to ensure you don’t have to choose between manual data stewardship or gaining a single view of only 80% of your customers. Verato Auto-Steward is a cloud-based plug-in for MDM technologies that programmatically and automatically resolves the difficult “potential match” tasks that MDM technologies cannot resolve on their own.

Here’s how it works. Once integrated with an MDM solution, the MDM sends any “potential match” tasks directly to Verato Auto-Steward, which leverages a powerful “Referential Matching” approach to automatically resolve these matches. Rather than directly comparing the demographic data of two customer identities to see if those identities match, Verato instead compares the demographic data from those customer identities to Verato’s comprehensive and continuously-updated reference database of identities. This database contains over 300 million identities spanning the entire U.S. population, and each identity contains a complete profile of demographic data—including nicknames, aliases, maiden names, common typos, past phone numbers, and old addresses. By matching customer records to identities in this reference database, Verato can make matches that conventional MDM technologies can never make—even if customer records contain errored, out-of-date, incomplete, or inconsistent demographic data.

Verato Auto-Steward has already been widely deployed across the U.S. and has integrated with some of the leading MDM technologies in the market. For example, a recent customer was focused on ensuring proper sales commission payment, accurate customer pricing discounts, and customer acquisition reporting. But their out-of-the-box MDM solution could not match millions of customer identities without manual data stewardship. Not only was this manual stewardship investment costing a lot of money, but the potential matches were still accumulating faster than they could be resolved. This drastically reduced the overall value of the MDM deployment. But with the addition of Verato Auto-Steward, this customer was able to reduce the number of potential matches in its MDM by millions within weeks of integration.

Ultimately, Verato Auto-Steward enables P&C insurance companies to ensure that the original business cases for purchasing their MDM solutions are still achievable without significant additional investment.

Learn more about “Referential Matching” by watching our 3-minute overview video. And see how much data stewardship is costing your organization with our stewardship calculator.

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