June 11, 2012 – While a significant minority of insurers are building, or intend to build, the specialized infrastructure to support big data projects, a report from analyst group Novarica describes the adoption rate of the technology as “tepid,” and anticipates a broadening analytics gap not only between larger insurers and the midsize insurers who will be left behind, but also between other industries and insurance.
The accompanying survey indicated that 15 to 20 percent of insurers are preparing their technology infrastructure for big data projects.
The industry’s willingness and ability to adopt such analytics tools is hampered by fragmented data environments, a lack of investment in tools, and an “apprenticeship-style staff development that values received wisdom over critical analysis,” the report says.
“While data analysis has always been at the core of the insurance industry, legacy technology environments and business practices have inhibited the embrace of big data by insurers,” said Matthew Josefowicz, Novarica managing director, partner and co-author of the report. “But the hype around big data has renewed focus on little data—traditional enterprise data and analytics—which is still an area of underinvestment for many insurers, especially midsize insurers.”
The report, “Analytics and Big Data at Insurers: Current State and Expectations,” is based on a survey of 86 insurer CIO members of the Novarica Insurance Technology Research Council, which was conducted in April 2012. It examines the current state and likely future of analytics tools for use against large volumes of internal and external structured and unstructured data.
“Insurers can profit immensely from the value of big data if they have created a culture where business leaders trust analytics and act on the insights provided,” Josefowicz said. “All insurers should take steps to create the culture today if it doesn’t already exist in their companies.”
The use of analytics in actuarial and financial areas is widespread, but insurers are much less advanced in using analytics for optimizing operational areas like marketing, underwriting or claims, the report added.
This story originally appeared at Insurance Networking News.
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