Knowing your customer: using a complete file on each customer, carriers can systematically evaluate and score new business and re-evaluate existing policies.

How well do you know your customer? It you're like many in the industry today, you're likely to say; "Not well enough." That trend is apparent in homeowners insurance. The remodeling industry is a multibillion dollar business in the United States and Canada and research shows that carriers frequently do not learn of additions or upgrades completed by policyholders until after a loss occurs, often presenting carriers with severe undervaluation and underinsurance issues.

Efforts to capture, retain and utilize client data are gaining in importance, and the experiences of some of the most successful carriers show that the best way to accomplish this is by using the advantages created by the Internet.

The Internet is an exceptional communication vehicle that, coupled with powerful data warehouses and comprehensive data sources, can carD' an entire property application or pieces of electronic information--a picture, a record, policy and loss history and more. By its very nature, the Internet can enable the gathering of a file virtually limitless in length. The value of this limitless record--The Complete Customer File, or simply The File--is in the consistency it would bring to carriers by automating each step in the insurance process.

The technology, and environment needed to develop The File already exist. Many insurers are providing secure extranets that not only serve as a means of communicating between producers and policyholders, but are conduits for quoting, issuing and amending policies. Data warehousing capacity is increasing rapidly. Database technologies are very reliable, with usable data sets, such as motor vehicle reports, flood zones, fire protection and claims histories springing up everywhere. Data integrity has been a difficult issue, but is progressing. With recent improvements in security technologies, it's time for carriers to take the next step and gather all customer data from new business, renewals, endorsements and claims transactions in one file per customer and make it accessible to "all parties in the insurance value chain.

The File must be deep in that it will archive all historical iterations--for example, how many times it was changed, when, to what effect and by whom. The File must be virtually limitless in its ability to hold content, including all internal underwriting and claims data as well as external data such as claim histories, motor vehicle reports, property valuations and geographical information such as proximity to hazards. It should also hold notes from underwriters, customer service representatives, independent agents and others.

The Complete Customer File "also must be accessible real-time to all appropriate parties and reside on a secure, reliable data warehouse system. All data must be accurate when posted and able to be updated as necessary.

Carriers already have a large amount of customer data, but because the data is contained in a multitude of formats and fries, including paper files, too much of the information is unusable and/or outdated. The value of collecting all this information electronically comes from data granularity and portability. The data in The File will become the basis for virtually all underwriting, claims, marketing and book-of-business decisions a carrier makes. It also will become the ideal springboard for launching efficient, cost-effective, automated underwriting decision making or business rules processing on a consistent basis.

Significant underwriting technologies over the past few years, such as artificial intelligence, Geographical Information Systems and Insurance-to-Value technologies have given carriers ways to easily obtain and apply external data sources and book-of-business management techniques to their policies. Complete Customer Files would aid carriers in systematically evaluating and scoring new business and re-evaluating existing policies. Also, by allowing integration of outside data sets and automated business rules, The File would promote greater consistency across an entire book of business.

If the data used to select policyholders is maintained in one database, carriers can more easily assess profitability by policy type, class of business, premium levels or any other desired criteria. Furthermore, the data is readily available to model proposed changes in underwriting policies and practices. The File also would allow authorized members of the organization to access information--across traditional silos--for maw purposes such as claims assignment and adjustment, renewal processing, market research and agent or claims adjuster performance assessments.

Customers are the most important assets carriers possess. Only by knowing customers can carriers retain customer goodwill. And, in the end, it is the quality and usability of a customer database--such as the Complete Customer File--that will allow carriers to know their customers, their wants and needs, their strengths and weaknesses--and to strategically manage that knowledge to meet customer expectations and carrier goals.

Bonnie L. McHenry is a vice president of Marshall & Swift/Boeckh. She can be reached at [e-mail].