An Interview with Jamie Bisker, Director of Research for the Insurance Practice at TowerGroup

Directions Magazine spoke to Jamie at the Location Technology & Business Intelligence conference, May 10-11, to gain an understanding of how he sees location technology folding into the insurance industry, and what the future might hold.

Nora Parker (NP): Jamie, thanks so much for taking time during the [Location Technology & Business Intelligence] conference to meet with me.

Jamie Bisker (JB): It's my pleasure.This is a good opportunity - I enjoy GIS, and I've studied it for years, actually, originally at Nationwide.I wrote the original GIS strategy for Nationwide, and I've worked a lot with ESRI and with MapInfo. And I see this technology as tremendously under-used in this industry.

NP: So, what do you see coming for the insurance industry as it relates to GIS?

JB: Right now it's a matter of coming up with point solutions, and enabling the technology in many places throughout the organizations in an enterprise environment. What I want to see is that we start with a foundation of the technology that enables any business group to use the same technology consistently without one area buying this set of data and another area buying a different set of data, and actually establishing a strategy that includes data, data cleansing, utilization, education and a realization of savings.

NP: In terms of that strategy that we're focusing on at this conference - the enterprise focus - do you see insurance companies beginning to come on line with that?

JB: To some extent. I think that the insurance industry has realized that the Internet offers them a business to consumer type of channel.That has enabled consumer portals for checking out claims and balances and those kinds of things. Part of that is the ability to provide agent locators, glass shop locators, body shop locators, and other third party service providers.These are ways insurers have been able to help their customers by leveraging this technology.I think that has helped other areas in insurance companies to realize that they ought to be leveraging this same technology internally. As part of my analysis, I haven't found an area in an insurance company that can't use this.

NP: How would you see that rolling out within an insurance company?

JB: Probably because people are looking for quick fixes and point solutions, there may have to be a large problem to resolve, such as catastrophe management.I think 9/11 brought a lot of that to bear - not just because of the underwriting, but also with the concentration of risk.They may have underwritten properties correctly, but if they didn't realize how much risk they were concentrating in one area, like lower Manhattan or downtown Chicago, or even a concentration in a particular type of agriculture, like soybeans in Arkansas, they can be seriously exposed.So recognizing where the risk lies, the location component, becomes very critical, and this can be an entry point.

So I think risk has a lot to do with it, but I think the real bell-weather, the real change, might come through marketing.There are higher returns to be achieved, better service to be provided to consumers, through using this technology, these are marketing issues.But because it's perceived as a point solution, it has its own limiting factors.I think education is a key factor; literally getting the word out that GIS is more than an agent locator.

NP: How would you do that?

JB: Education...I think the challenge is that GIS is an enabling technology, it's not the silver bullet or a killer app.However, as we approach higher levels of efficiency leveraging the technology, people are going to be looking around wondering, "What else can we do?" I think GIS may have its angle there, that this may be where you can get that last 5, 10, 15, maybe 20% of efficiency that people are looking for.The beauty of GIS is that it provides a new dimension on information you already have, with very little extra work.

NP: Can you tell me more about your role at TowerGroup?

JB: Sure.TowerGroup is a research and advisory company out of Massachusetts that provides technology investigation, research and advice to the financial services community. We are unique in that we only deal with financial services - all forms of banking, securities and investments, and insurance.As the director of research for insurance, my job is to look ahead and see what technologies can help an insurance company, what may be false starts, what may not be as powerful as once thought, or may be all glitz and sizzle.

Our role is to inform, to let people know.And that's one of the reasons I like working with MapInfo and the other companies in this space.Our goal is to remain an impartial, third party observer.So no matter what vendors we work with, we're not in the business of compiling lists of who is better or worse.We work with vendors to understand the technology so we can promote it to the industry. We work with carriers and third party suppliers to carriers, vendors and professional services firms to help them understand the utilization of technology, all to help the industry out.It's really all about helping the industry leverage technology.

NP: In terms of technologies, what other technologies are you tracking that you view as important, and how would you prioritize spatial technology within those other technologies?

JB: GIS is equally important as the others we're tracking.We track data mining, rules-based technology, knowledge management, education technology, business intelligence, artificial intelligence, etc.These are all important when you consider that in the insurance industry, the only "natural resource" they have is the data.

NP: Let me ask you if you feel that this program we're sponsoring here at Wharton helps the insurance industry be educated about the technology?

JB: Being humble and modest here, I think what's important is that it helps me.Because the more I understand about this technology, the more I understand about what's possible and why.My role is to promote the content of the dialogue by letting the industry know that GIS is a viable technology for insurance and the financial services.By having a high-profile school like Wharton, one of the most respected business schools in the country, promote this event, it helps the industry recognize that there is something here ...it isn't just a flash in the pan.It is real.

And the fact that GIS has a history - it's over 50 years old now - it's more viable than they perceive it to be.And that's our job.GIS started as a governmental, natural resource application, and now it's working in the business world.The insurance industry doesn't know that, it doesn't understand its potential.They only see it as a point-solution for what they perceive as the most recent pain, to help them get through a specific situation.So I think that it's useful to help industry analysts such as myself get up-to-date on what's new and important.

NP: Do you see GIS applying to the other areas addressed by the TowerGroup, e.g.banking and finance?

JB: Certainly.I tend to be the "in-house GIS person," and I continue to promote it to my fellow researchers.I think that in other areas such as banking, the application tends to be more in the site selection, service planning, and understanding what demographics and location aspects mean to companies.

Within insurance there are some very fascinating applications that we haven't really seen come to market yet, but I think they will.For example, a pay-as-you-go car insurance product, where you use GPS and GIS to actually track the usage of the automobile. For example, I work at home, plus I travel a lot.So my personal car gets very little use.So why should I pay the same insurance premium as somebody who commutes to work everyday? I think these kinds of applications are coming.

So we have the marketing angle, the risk angle, assisting people with claims, we have demographic analysis, we have closed claim review, fraud detection - there could be an area in the city where there's an insurance fraud ring of operation - and getting proactive e-mail and voice mail from your insurance company, saying something like, "hey, we're getting a lot of claims for traffic accidents in a certain spot, maybe you should avoid that area."

NP: Can you talk a little more about closed claim review?

JB: Closed claim review is a retroactive process to analyze claims and what type of risk they represent as a group.It's also a way to check up on fraud.But if you look at fraud after the fact, you're only going to be able to catch a certain amount of it.Whereas leveraging location-based intelligence, you may be able to catch fraud more quickly.This is a $25 billion-dollar problem in the US alone - that's a lot of money.It's a huge industry in and of itself, and anything you can do to prevent that would be significant - understanding geographic patterns and other aspects will enable companies to avoid it, prevent it and reduce costs overall.Fraud adds $300 a year to everybody's insurance bill.Part of what you're paying for is fraudulent claims.That's why rates are high.