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Member, Beacon International Group, Ltd.
Insurers will need to address lingering data storage and data quality issue before realizing the potential of big data technologies, a report issued in August by Stamford, Conn.-based research firm Gartner Inc. finds.
The report, which was written by Kimberly Harris-Ferrante, Gartner vice president and distinguished analyst, says the volume inherent in big data will stress the aged information technology infrastructures present at many insurance companies.
“To be successful, it is critical that P&C and life insurers understand the emerging issues related to big data,” the report states. “These include volume, velocity of data, complexities, data management, governance and the necessary IT funding.”
Additional challenges associated with big data will revolve around architectural changes necessary to retrieve data trapped in legacy core business systems and solving data ownership issues amongst departments and lines of business, the report states.
Moreover, challenges will mount as the mix of data insurers collect for analysis shifts to include information gleaned from social media and mobile devices.
“Insurers are ill-prepared for the new demands of big data, especially around the large volumes to be accumulated as new data sources (especially public) are used and focus is broadened to unstructured data analysis,” the report states.
As such, the report recommends that insurers identify the limitations of legacy policy and claims management systems to support big data and budget accordingly.
“Big data initiatives will require larger investments in data storage, new analysis tools and possible legacy system replacement,” the report states.