In the fast-paced digital landscape of today, personalized marketing has become an essential component of attracting and retaining customers across nearly all industries. Concurrently, consumers are becoming increasingly vigilant about safeguarding their data, expecting businesses to act as responsible custodians of their personally identifiable information (PII). The use of data clean rooms has garnered significant interest in the insurance industry, offering an abundance of benefits relating to consumer privacy and beyond. From enabling second-party marketing to facilitating data sharing between different business arms, clean rooms present a novel avenue for insurers to leverage insights without compromising PII.
With the increasing reliance on data to drive differentiation, it’s critical that organizations invest in sound data governance practices that protect the best interests of both the company and consumers. For insurance providers, keeping data organized, secure, and available when needed can be a daunting task. Organizations that don’t prioritize sensible data management are most at risk, which could result in outdated marketing, meager sales, or even a data breach that could significantly damage a brand’s reputation. And the organizations that do practice good data governance will be able to leverage their assets in ways that fuel the next generation of insurance marketing.
On average, about two-thirds of data available to enterprises goes unleveraged, according to a survey from Seagate Technology.1 For example, in prominent marketing use cases, organizations that are unwilling to share PII or sensitive data across organizational boundaries make it impractical to leverage otherwise interesting third-party insights. Given the existence of so many multi-party business processes within the insurance ecosystem, organizations that are able to collaborate by connecting first-party and third-party data without exposing PII or sensitive data will be able to tap into this unused pool of data, creating a significant advantage over their peers.
Here is how insurance providers are effectively employing data clean rooms to safeguard sensitive data, ensuring privacy while retaining complete control, and harnessing cutting-edge marketing opportunities.
Building a Data Governance Foundation
In essence, data governance is the process of regulating the availability, integrity, and security of an organization’s data, based on both internal data standards and external privacy regulations. Organizations should develop a dedicated framework to ensure the right people, processes, policies, and technologies are in place so that data within a business is discoverable and anyone who handles it upholds the proper procedures.
It’s important to note that data governance is not one-size-fits-all. Every company has a slightly different variation of data governance and method for how they organize best practices and policies for their company. For example, insurers handle large amounts of personal data for policyholders and employees. This data, however, can be siloed, aged, and poorly organized, making it difficult to share between departments or divisions and particularly with other companies within the broad insurance ecosystem. Insurers must eliminate these obstacles to have a deeper understanding of how consumers join, interact with, and exit the business.
In today’s fast-moving environment, it is a challenge for many insurers to keep pace with data regulations, technology, and industry best practices. Yet organizations that implement good governance programs can improve return on data investments and gain a distinct advantage in the highly competitive battle for consumer attention. Technology can play a key role in shoring up risk by replacing unreliable manual processes with smarter digital strategies that reveal new insights.
The Synergetic Value of Utilizing Data Clean Rooms
A data clean room is a secure environment that allows multiple companies, or divisions within a single company, to bring data together for joint analysis under defined guidelines and restrictions. By allowing involved parties to define distinct sets of rules to manage the use of raw data, clean rooms provide a framework for achieving efficient processes and best practices. These rules streamline data governance by dictating how data is managed, what data can enter and leave the closed environment, and what data is accessible to each party.
Experts suggest the time is now for insurance organizations to transition away from legacy technology stacks and data silos and consider a cloud-based model. Adopting this strategy allows organizations to reimagine multi-party data-driven business processes and collaborate effectively across organizational boundaries, all while maintaining privacy and fostering strong data governance practices.
Traditionally, clean rooms were physical locations that stored, maintained, and updated data for companies with particularly sensitive information. Of course, with a physical location comes limitations, especially with respect to the complexity and heavyweight processes involved with the sharing of sensitive information. The development of cloud technology has eliminated the need for these physical locations since the data can live in the cloud and be secured with digital access policies rather than physical walls. Cloud technology also enables an environment which allows for increased opportunities for collaboration, as each partner is in control of its own data while enabling governed analytics with other partners simultaneously.
Another major win for insurance organizations is that the PII residing in a clean room can be anonymized and stored in a way that makes it much simpler to adhere to the variety of state legislation surrounding consumer privacy. This ensures that multi-party, data-driven business processes will not add to the significant burden that organizations face when managing the right to be forgotten, the right of restricted use, opt-out rights, and other key privacy laws. Not to mention, customers can rest assured that their sensitive information is in good hands.
Finding a Solution that Works for You
Many technology companies offer data cloud and clean room services, but not all are created equal.
Today’s data privacy laws and compliance considerations limit what can be shared, impacting how insurers are able to generate insights, collaborate, or manage risk. A core tenant of a data platform is data collaboration, and a key extension of this is data clean rooms which enable secure multi-party joining and restricted querying of customer information without exposing the underlying proprietary data belonging to each party. Successful implementations of data clean rooms will accelerate core use cases like marketing analytics, consumer/business 360, fraud detection, and claims management.
When it comes to considering which data clean room provider is the best fit for an organization, there are a few things to keep in mind. First and foremost, it’s critical that the provider can scale. Since insurers manage varying complex relationships with new and existing policyholders, IT leaders will want to ensure that whatever technology partner is chosen can grow with the business.
Another thing to keep in mind is interoperability. A recurring issue with many data clean rooms today is that all parties involved must be a customer of that specific clean room. This, of course, can limit opportunities to collaborate. Therefore, insurers will want to ensure that the organization and its marketing and sales teams can easily access and distribute data and applications across business units, partners, and customers, even if they aren’t integrated with the data clean room provider.
The more data an organization has, and the better it is organized, the better the decisions that can be made. Innovative solutions made possible by cloud technology, including data clean rooms, have the ability to transform the insurance industry in ways that benefit all parties involved.