Data–specifically customer information–is the very lifeblood ofthe insurance enterprise. Not surprisingly, then, ownership andstewardship of that data is a subject on which many in thisindustry disagree. Having heard the arguments over the years,National Underwriter decided to ask two key questions of an agent,a carrier's chief information officer and an industry analyst:

o First, who actually owns the customer's data?

o Second, with whom should that data reside?

“The customer owns the data,” according to Jerry Fox, vicepresident at James M. King & Associates Inc., an agency basedin Bloomington, Minn. “It's their information, just as in everyother [Health Insurance Portability and Accountability Act] system.They allow us access to it, but it is their information. In somecases, the agency and the carrier both store copies of that data,but it is still [the customer's] and we are responsible to protectit.”

Where, then, should that data reside?

“In my opinion, the fewer places it is stored, the better,because [having it in multiple locations] makes it more difficultto access,” said Mr. Fox, a former president of the AMS Users'Group.

“Being that a majority of agencies are small-to-midsize–with18-to-20 employees and under–that does not allow them to havesignificant budgets for data security,” he added. “Carriers havethose resources available to provide proper security for the data,and that's where it should reside.”

According to Mr. Fox, “future technologies dictate that datashouldn't be residing in multiple locations, so agents should notbe storing the data.” However, he added that he doesn't believe theinsurance industry currently has the technology to allow carriersto be the only entities to store customer data.

Assuming the technology does develop and is implemented, Mr. Foxsaid the key is that insurers must give agents unrestricted accessto the data. If that doesn't happen, he noted, “then I will end upwith it” by default.

Data security is also an issue in the debate over where datashould be stored.

“We need to push the technology to be where we want it to be so[agents] can access the data and not have to store it, becauseevery time there is a copy of the data, there is another place forintruders to get it,” said Mr. Fox. “In addition, every time youmove it, something will be missing, because there are databasestructure inconsistencies. So, where is the correct data? Somethinghas changed.”

While he advocates insurers holding customer data, Mr. Fox alsosees problems with that situation for agents.

Sometimes, agents may not be able to access the data,“especially if you no longer have a contract with that company,” heexplained. “This can be resolved, however. We need industrycooperation carrier-to-carrier, consistent solid security and ameans of authentication for all carriers. Right now they are alldifferent.”

He added that “overall, there are way too many holes in securityfor both agents and carriers. A carrier changes passwords every30-to-90 days. How do I keep up with that?”

The solution, he noted, is “an electronic certificate that wouldauthenticate me, even though I don't have a contract with themanymore.”

Taking a somewhat different view is Penn National Insurance CIOWilliam R. Jenkins, the company's vice president of informationtechnology.

“Technically, the agent–an independent agent, I assume–owns thedata of the book it writes,” he said. “Carriers, however, view theagent as an 'extension' of [the carrier] getting to thepolicyholder. As such, carriers rely on the data collected from theinsured in the furtherance of their business.”

He added that “in other words, insurers need this data toproperly identify the most profitable products, most profitablecustomers, and to identify new products and customers–that is,perform business intelligence.”

According to Mr. Jenkins, “there has been an ongoing debate foryears as to who really owns the customer,” let along theirdata.

“A number of carriers believe and act as if they own thecustomer,” he said. “This thinking seems to have evolved ascarriers began to provide more and more services directly to theinsured–including direct billing, policy changes, first reportingof loss, loss control services and claims analysis. In effect, theyare managing the customer experience.”

Mr. Jenkins also pointed out that direct writers continue tomake gains against the independent agency carriers, and this mayresult in independent agent carriers “seeing the need to becomemuch more protective of their books.”

In terms of where data is kept, Mr. Jenkins asserted that “thedata today, in my opinion, should reside with both the agent andcarrier. Both parties need to thoroughly understand theirrespective books of business so that cross-selling andprofitability targets can take place.”

He added, however, that most agents lack the expertise and timeneeded to do these types of analyses, noting that “they basicallyrely on their carriers to do these analyses.”

The critical question is “what can each party–carrier andagent–do with the data?” he said.

According to Matt Josefowicz, director of the Insurance CoreTeam for Norvarica, based in New York, “agents and insurers shouldfocus more on creating value and less on trying to hoardinformation.”

“I think it's a mistake to think in terms of 'ownership' ofdata,” he continued. “Neither the agent or the insurer 'owns' thedata. They are both given stewardship of data by an insured. Ifthey can use that data to provide additional value in a way thatthe insured has given them permission to do, then that's good forthe insured.”

Mr. Josefowicz asserted that both the agent and the insurershould have copies of customers' data.

“Obviously, some agents are afraid that insurers willdisintermediate them if they give up control, and some insurers areafraid they are more likely to have their policies churned if theydon't have direct relationships with the customers,” he observed.“But exclusive control of information is not a defensible positionin a world of Google, Lexis-Nexis and ChoicePoint.”