Insurance Loss Triangle Analysis
You know you’re back to work when you have some numbers to crunch. Today I am looking at the first two videos in the Extending SAP HANA Live for Insurance series. These videos are led by people with contrasting styles and approaches to the topic. Peter Dubowchik is in the SAP Insurance Industry Business unit and Tahir Hussain Babar, aka Bob, is part of the SAP HANA Academy.
Pete’s video introduces the series and provides an overview of what will be covered from, as you would expect, a business perspective.
What is HANA Live?
Pete describes this as a set of pre-configured HANA calculation views that are modelled and extended in the HANA Studio that form the foundation and enable insurance carriers to quickly implement real-time operational analytics across the entire insurance value chain.
How is this done?
Pete explains that this is done by combining the capabilities of the SAP HANA In-Memory data platform with the power of SAP visualization tools.
Pete then discusses the value that SAP HANA adds to customers and partners. He outlines the types of business leaders that can gain real-time insight into how the business units are performing very quickly after installing HANA Live Insurance. He highlights that the virtual data models are free and can be downloaded from the SAP Service Marketplace.
What are the goals of HANA Live?
Firstly, to enable self-service real time analytics for business leaders and managers, this is accomplished through various tools such as Microsoft Excel, SAP Lumira and Design Studio. All these tools can connect directly to the HANA calculation views without any other semantic layer necessary which cuts down on implementation time.
Secondly, to reduce the need for further training, especially modelling, there are no proprietary skills needed. No additional training is necessary in order to enhance or change the delivered HANA models. It is easy for IT staff in the insurance industry to model in the HANA Studio using both graphical techniques and SQL scripting.
Lastly, to provide a unique, uniform way for managers to gain insight across multiple lines of business because it provides one data model that can accept data from multiple sources, multiple lines of business. This is not always easy as insurance carriers, for example, the automobile insurance data may be in one data model and the data for commercial general liability for instance may be captured in another data model making analysis into a combined dataset very difficult.
Bob starts with a demonstration of the app that will be made during the course with an explanation of each of the steps and technologies that will be utilised.
He starts by describing the app and how it was built with SAP UI5. The app itself consists of a map that uses SAP geospatial capabilities on the left hand side which you can draw a closed shape on to display any information in that area. The information (from SAP HANA Live) that will be displayed forms part of a loss triangle. This is a table of loss experience showing total losses for a certain period at various regular valuation dates. This shows the change in amounts as claims mature. All the periods in the table will have one entry than the next youngest period leading to the triangle shape of the data in that table. This can also show paid losses and total losses incurred. At the top are the total claim payment amount and the total premiums before tax amount. You’ll see that there are some zeros on the bottom right hand side indicated in green.
These zeros can be replaced with a prediction for those dates and claim periods.
In this demo you’re taking this loss triangle extracted with SAP HANA Live from ECC tables and then sending that to R. This example uses the chain ladder algorithm to predict those results which show zero values.
You will also see that you have access to some filters because the data comes from SAP HANA Live. In later videos you will learn how to append extra columns that you may want in your BI tool. As part of the course you will see how to modify SAP HANA Live to get the exact dates that you want in the various views that you’re using on your SAP HANA system. To make this app work you’re also going to use XSJS and OData.
After providing an overview of the architecture, Bob, like Pete before him provides an overview of the core videos on the course.
At the centre you have a SAP HANA box running on Linux which contains a series of SAP ECC tables that contain data. It is assumed that your ERP system is loading data to the ECC tables.
Course Overview on Linux
On this course you will learn how to install and use SAP HANA Live. At the high-level, SAP HANA Live is a series of calculation views which sit on top of your SAP ECC system. Obviously they contain all the business logic so they can be considered a semantic layer or virtual data model. The course will also show you not only how to use the SAP HANA pre-built views but also how to modify the views to fit your business needs. This will include adding extra columns or content from various views or tables within your SAP ECC system. The course will also introduce you to SAP geospatial. Essentially you’re going to create a point column from lat long data for a series of addresses within your SAP ECC system. This will then enable you to create a SAP HANA Live view which combines SAP ECC data alongside SAP geospatial tables.
Course Overview on Windows
You’re also going to do a lot of development on a Windows machine using the SAP HANA Studio. Once you’ve actually extracted the data you want from your SAP HANA Live system and combined it with SAP geospatial information you’re going to send that data from your loss triangle to an R server so it fills in the zero values. To do this you will configure the SAP HANA server to connect to R and execute procedures to bring back the data. You are also going to use the Web I D E which is browser-based tool and is essentially equivalent of the SAP HANA Studio. You are also going to learn how to use OData , XSJS and UI5 to build the user interface. Finally you will use two components of UI5, the HTML viewer and the controller which enable you to view data from Google Maps.
It is always great to be able to have different perspectives when learning about something new. This is especially the case with numbers which many of us found dry at school. Putting them, in what is known in England as a vocational context, helps brings relevance to learning which as we all know helps people focus and remember. Following this course will not just help your understanding of the technologies involved but will help you understand their application in unfamiliar environments. In short you will learn what, why and how SAP technologies can help, in this instance, insurance companies.