The Use of Data Warehousing in Life Insurance Companies

No.53
June 1999
Financial Consulting Division
Managing Consultant Hideki Omoto
Senior Consultant Naozumi Nishimura

1. The sophistication of data warehousing (hereafter DWH) is progressing at a startling rate. This report highlights the application of DWH occurring in the life insurance companies of financial institutions, and with the new concept of a data warehousing business model as a base, investigates the field of systematizing information. More specifically, this report explores three DWH business models, consisting of sales process, operations process, and management process, and explains the applying functions of DWH.
2. This report examines a specific application image of DWH using a logical approach. Specifically, this study considers a DWH application image concerning the role of call centers as decision-making support services in both the sales process and other, newer services. Further, focusing on OLAP and data-mining functions, this report investigates the application image of DWH tools.
3. The data analysis process is divided into four steps: (1) clarification of the purpose of analysis, (2) setting standards of analysis, (3) data analysis, and (4) establishing the enforcement of measures. FRI considers each of these steps as essential, but the data cleaning and construction of hypotheses that are a part of step (2) are particularly important. While this is a step that requires a great deal of time and patience, analysis without this step is unthinkable. Establishing and enforcing measures is a step that must follow data analysis; if the results of data analysis are not reflected in measures and policies, the analysis itself is meaningless.
4. Employing historical data from actual life insurance call centers, FRI conducted data analysis from a variety of angles. The four themes of the analyses are: clientele who were persuaded against canceling contracts, walk-in clients for loan contracts, clients with complaints, and calls from those clients with complaints. These themes were decided upon by considering numerous factors comprehensively, including present problems in the life insurance industry and the results of recent hearings. Each of the analyses uncovered fascinating insights, but in the analysis of clientele who prevent contract cancellation, for example, it became clear that the skill of the of the call center operator handling the call played an important role in whether or not the client would cancel the contract. From these results, FRI proposes the following two strategies for managers in life insurance companies: (1) in order to prevent the cancellation of contracts, create a script for call center operators based on those operators who demonstrate successful skills in handling such calls; (2) conduct operator education using role-playing for contract cancellation-prevention scenarios.

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