American Physicians Insurance, a medical malpractice insurance provider for physicians in Texas and Arkansas, mines a warehouse of policy and claims information to improve all kinds of corporate decisions, from pricing to marketing to the level of reserves it maintains.

BPM Magazine: What aspects of corporate performance does your organization analyze regularly?

Marc Zimmermann: We look at a variety of information. Obviously as an insurance company we handle underwriting, claims, marketing, risk management, and servicing of policies. The two core components of our performance reporting are our policy information and our claims information. These are our facts. We extract information regularly on head count, or policyholder count, and premium numbers. We also look at cancellations -- who canceled, why they canceled -- and nonrenewals, whose policies we didn't renew. And we analyze the results of our top-producing independent agents. We also evaluate open claims, closed claims, and frequency and severity of claims. Frequency is how many claims were opened and closed in a given time frame. Severity is the size of indemnity payments and how we're settling claims -- are we settling before trial or during trial?

We analyze this data across three core dimensions: We look at it by specialty, such as OB/GYN, anesthesiology, family practice, etc. We look at it by policy limits. And we look at it by practicing territory or what part of Texas or Arkansas was a claim in? What county?

BPM: How do you use this information?

Zimmermann: We base decisions on it on a day-to-day basis. For instance if we're seeing a large number of midyear cancellations, physicians canceling before the year-long policy period ends, we try to take immediate action. What can we do? Can we keep them? We're using the policy and claims information to improve our customer service. But, more important, we're making better decisions and learning from that information.

Insurance is an information and a people business. We don't have any hard assets or technological manufacturing advantages that you see in other industries. Competitive advantage for us really comes down to people and information, to making better decisions with information. Having access to the right information definitely helps us make better decisions on pricing, on rating. From a reserving perspective, it helps to look at claims trends, look for spikes in frequency for a particular specialty. Then we can ask, is that a broad issue with that specialty, or is it just one particular group of physicians or an individual physician who is driving an increase in frequency?

So we use the information in our data warehouse to look for trends on an ongoing basis. Plus, from a board perspective, we're trying to effectively communicate what's going on in our business. It's important to provide good, solid, transparent information to the board so they can make well-informed decisions when it comes to the overall financial well-being of the company.

BPM: Who analyzes this trend information, like a spike in frequency of claims in a certain specialty or policyholder cancellations?

Zimmermann: Our department heads, which includes our vice president of claims; our director of physician services, who manages our accounts; our accounting team; the executive team; and the board of directors are the key stakeholders evaluating this information.

BPM: These people actually delve into the database, or do some of them look at dashboards?

Zimmermann: Well, we have different types of users. I would describe my controller as a power user, but then there are people like me, people who use the reports and know how to navigate around BusinessObjects but aren't necessarily the best creators of reports. But we are trying to remove IT from report creation.

In the past, our business would come to a complete halt whenever we needed a report or wanted to modify a report. And then we'd finally get a report that IT produced and it wouldn't be in the format we wanted, the columns that we wanted. So they would have to reprogram the report. That environment made it very, very difficult to get our arms around information.

So our goal with the Sybase IWS and BusinessObjects was to remove IT from the process, where we don't have to go to them every time. We can extract information out of our warehouse and save time, improve the information that we're able to extract, look at trends, and evaluate our business.

BPM: Were you able to do that?

Zimmermann: Absolutely. It used to take two to three weeks to get ready for a board meeting, but we've been able to narrow that down to about two days. We can now extract information ourselves and make sense of it. And we can modify it on the fly. We have certain standard reports that are run every month and then we have certain ad hoc reports that are done by the business user.

BPM: What is an example of a specific decision that has been informed by these improved reports?

Zimmermann: A good example is the report we run that looks at our claims opened in relation to our head count on a quarterly basis, head count meaning policyholder count. We establish a baseline ratio for all open claims in relation to average head count at the beginning of the period and the end of the period.

From that baseline, we do the same for claims opened for a particular specialty, also in relation to the head count for that specialty. And we look to see if there are any trends related to that specialty compared with the average for the company. We make important decisions based off that type of information. For example, this is a data point that we take into account when we evaluate rates.

We also look at reserving reports, at what's going on with our case reserves, on a monthly basis. Without getting too technical, we basically evaluate what's going on with our case reserves, what we're seeing surrounding increases in our case reserves, to determine our position in relation to reserves we're setting for our open claims.

We also do some querying and ad hoc reporting for information requests from the department of insurance, and having better business intelligence really helps us get ready for these data calls.

BPM: Do you also analyze performance data for sales purposes?

Zimmermann: We look at policyholder count across specialty, limit, and territory to get a general feel for market segmentation. Are there territories that are underdeveloped in relation to other areas where we have a lot of business? We use this data to make decisions on marketing, on what type of targeted marketing campaigns we want to do for a particular specialty. We also encourage our independent agents to focus on marketing to a particular specialty based on this analysis.

BPM: Do you do a profitability analysis by specialty or geography?

Zimmermann: Yes. We look at loss ratios by specialty, by policy limit, and by territory. We'll look at our losses in relation to the premium written for a particular specialty and make decisions on pricing. We look at reinsurance claims, what we're seeing in claims in the excess layer, and we'll use that data to make decisions on reinsurance. Now, as we build out the dashboard, we're also starting to build out some numbers in relation to budget, comparing written and earned premium to budget.

BPM: Are there tangible financial outcomes as a result of having access to all this information, or is the return just a feeling that decisions are better?

Zimmermann: One financial benefit is to get people focused on what really matters. Our people can quickly have access to information that allows them to focus on customer service, handling claims, or risk management programs. The new data environment is also allowing our IT team to be redeployed on strategic initiatives and not back-end reporting. But a lot of this is an intangible benefit.

Sometimes an ROI with information is difficult because the fact that you've got good information doesn't mean you're making better decisions. Our improved data analysis is only one component of our strong performance and our ability to deliver a competitive product. At the end of the day, having access to information only gets you so far; it is the decisions behind the information that drive the performance of our business.

BPM: Was it challenging to figure out what data to look at?

Zimmermann: Yes. What we tried to do is really focus on our requirements on the front side. We really focused on what we need. I'm a big proponent of the book "Good to Great" and focusing on what your core metrics are. What is your economic engine? What drives your company from a financial perspective? We've tried to almost be minimalistic. You don't need a thousand reports. You really need a few key reports, and getting people to focus on what they really need is the hardest part of this.

BPM: What advice would you give to a company with a lot of data in its data warehouse that doesn't know how to start mining the information?

Zimmermann: You really have to engage your business users -- the people who use the information -- in the process early. You have to get them to clearly articulate what it is they want. And you have to be patient. You're expecting people to visualize something that they haven't seen. What are their requirements for information? Look at the facts and the dimensions they really want to look at. We honed in on specialty, limits, and territory.

That would probably be my main recommendation: Spend the time on the front side to gain an understanding of what it is the user really wants and then try to deliver the report. Don't get caught up on the look of the report. Get the information out there, and you can always modify the report -- whether it's BusinessObjects or other reporting tools in the marketplace -- they're all pretty robust when it comes to modifying the report or making it look good.