Merger and acquisition (M&A) activity in the insurance sector is surging. During the first six months of 2022, it reached its highest rate of growth in a decade at 9.5%, according to new research by Clyde & Co. – and that’s just risk-carrier merger and acquisition. The broking sector is also experiencing a merger boom, and neither shows any signs of slowing down.
Every deal is intended to deliver the magic maths which makes one plus one equal something more than two but, unfortunately, it doesn’t always add up that way. Poor data governance is often the culprit. The insurance sector is in the early stages of its digital transformation; one component of which should be the recognition of data technology as an essential component of the M&A process. Put simply, data tools lead to successful business amalgamations, and the right time to get this issue sorted is before an acquisition takes place.
Legacies and silos
One of the key challenges we hear about in the industry is legacy systems. Data silos continue to plague the sector even with the advancement of modern technology. Too often, the wealth of information held by an insurer is separated not just by the line of business, but also by the systems which hold them. Having one platform for motors, another for households, and still others for speciality lines make invaluable data almost inaccessible across departments. This limits the insights and opportunities held in those datasets, making the single customer or broker view unachievable, even with some of the best technology.
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As has so often been recognised, there’s serious power in big data. But many firms lack a single internal data pool, which puts a massive break on cross-selling and upselling opportunities. The insurer misses their greatest potential clients – existing customers – and may even be leaving them under-protected. Furthermore, siloed data may give rise to compliance problems that can attract regulatory penalties and fines.
Many mergers aim to renationalise, improve, and better exploit data systems, but data silos are best addressed before the amalgamation process. The inability to sort and analyse data before the merger delays the new entity’s capacity to maximise the sum of its expanded data pool. That may make it impossible to optimise the opportunities that drove the merger in the first place.
Reorganise and a digitise
Unstructured data further complicates the process. Insurance companies typically have actual and virtual reams of it. Proposal forms, risk assessments and letters contain a trove of invaluable information, but the technology designed to read those documents and transform them into useful, accessible formats is limited and rarely deployed. Similarly, Word documents, PDFs and meeting notes must be scanned by human eyes to make their insights actionable.
To maximise efficiency, it is essential to organise this data properly, digitise it and incorporate it into the central data pool because it is typically the home of all elements of customer interactions, insights and needs. These inputs may powerfully impact the services insurers will choose to offer them, but a five-year-old call note in the form of a Word doc is of very little value until it is transformed into accessible data.
Migration solutions accelerate data sharing at a reduced technical cost. They can be used alongside other specialist tools to call out potentially non-compliant unstructured data before the insurer is placed at financial or reputational risk. Robust data governance isn’t optional; it is the pivotal difference between a merger that turns a profit and one that doesn’t. Three critical processes will help to ensure that a merger is not only sustainable but delivers the magic maths.
Preparation and consolidation
Step 1
Gather your data and prepare it for migration
No doubt some of the partner firm’s data will be unavailable to IT teams in advance, but it is essential that each merger partner prepares their own data ahead of completion. This will simplify the process significantly and create valuable insights into the information they hold. In other words, insurers should smash their internal silos before they begin the merger to ensure that efficiency issues and compliance liabilities are surmounted before the transaction begins. When both companies understand and have documented their data, the paired data sets can be combined more easily.
Step 2
Manage unstructured data
Both partners should create and implement efforts to bring unstructured data into one place. Volumes of unstructured data impact transactions because they form blockades against any project objectives. Due to the nature of unstructured data, it’s difficult to get a handle on so it is hard to avoid any pitfalls. Technology exists to tame this data, quantify existing compliance risks, and understand the breadth of the information held and free trapped data held across the business for positive, practical action.
Step 3
Create a single repository
All data held by the merger partners should be combined into a single repository. The sooner this is achieved, the faster the enlarged firm can leverage all their joint pooled knowledge and maximise the data potential. That allows the merger maths to add up sooner. The more efficient and effective the data migration, the more likely a business will achieve post-merger targets around savings, growth and efficiency.
Discover Dufrain’s data architecture solutions to find a model that works for you.
Accelerate opportunity
To support businesses to accelerate their migrations and data strategies, Dufrain has created a suite of accelerators to help businesses reach goals faster.
1: Flightpath: Accelerates data migration to support M&A activity and digital transformation programmes. The solution speeds up and simplifies the data migration process whilst maintaining quality. It is simple, reduces the need to hire costly technical expertise and can bring substantial savings to the migration process.
2: ControlTower: Dufrain’s unstructured data accelerator, which transforms trapped information into useful, accessible knowledge. Around 20% of data will be structured in 2025, which leaves the majority of business data unstructured and businesses blind to insights and open to risk.
Such off-the-shelf tools can be implemented incredibly quickly and will rapidly deliver results. They eliminate the silos and free trapped information to create a uniform and useful repository comprising all of the company’s data. From there, the benefits of the merger are much more within reach.
To accelerate growth and deliver results quickly, talk to us today and allow our team of data experts to walk you through the accelerators.
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If you’d like some expert guidance on accelerators and talk to a member of our team today
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