While the need for data governance is recognized by all insurers, there is great variety in how carriers organize these governance groups, and their objectives, challenges, and measures of success. We partnered with the Insurance Data Management Association (IDMA) to conduct a study with 61 carriers and analyze how insurers are approaching data governance in their organizations.
Interestingly, there is no one preferred approach for organizing data functions. These groups can be led by the CIO or IT resource, the CDO or dedicated analytics function, actuarial or other business executives, or data councils. As expected these organization prioritize various objectives, and experience different levels of support from different business units.
On average, performance management and digitalization are the top objectives for data governance programs, while reduction of redundant data acquisition costs is the least important. Out of the group, CIO-led organizations see performance management as the most important issue. Since these resources often hold a solid or dotted line to the CEO, many are the first whom executives turn to when there are data issues.
Overall, most data organizations are not actively using formal ROI calculations to measure success of data governance programs. Instead, most use completeness of metadata and data quality as measures of impact. Carriers can potentially see more support for data governance efforts when primary business use cases are clearly defined and formal metrics are measured. Stakeholders are more likely to demonstrate high degrees of buy-in if they understand the WIFM (i.e., what’s in it for me?).
Since data governance practices are not yet fully mature in many companies, carriers see a variety of challenges to effective data governance. Weak executive sponsorship is a significant issue across the board. This insight is even more interesting when coupled with the overall low use of formal ROIs. Executives are less likely to stand behind governance initiatives when they cannot see how data governance affects their goals and their abilities to sell more, cost less to operate, and manage risk better. Lack of business unit attention and funding limitations are additional key concerns and challenges for leaders of data governance initiatives.
Carriers need to be confident in their data and rely on complete, accurate, and secure data to assess risks, predict losses, and understand their customers better. Different organization structures display varying behaviors around objectives, metrics, responsibilities, and challenges. We provide deeper analysis into these topics in our recently published report, Data Governance: Current State, Objectives, and Challenges.
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