Big data continues to gain traction among insurance professionals, but its footprint is still relatively small, according to Strategy Meets Action (SMA), an insurance advisory firm. The findings are part of two new SMA studies that look at the increased focus on big data within the insurance industry.
Indicative of the growing interest in big data, this year 25 percent of insurers say they are investing in big drojects—a big jump over last year’s 9 percent. On the other hand, that leaves 75 percent of all insurers that still haven’t tapped into the technology’s potential.
"Big data and analytics are a paradox in that they may be simultaneously over-hyped and underestimated,” SMA partner Mark Breading said in a prepared statement. “It is not going to change the insurance world overnight, but the potential is enormous and benefits are already being reaped." Breading is the lead author of the Priorities, Projects, and Investment Plans report.
Larger insurers, with $1 billion or more in direct written premium (DWP), are investing more aggressively in big data initiatives. Compared with 39 percent of large insurers, only 14 percent of smaller insurers, with less than $1 billion in DWP, are undertaking big data initiatives this year.
The study also found that actuarial, product development and underwriting remain the top areas for big data applications, with 28 percent of P&C companies and 15 percent of L&A companies already using big data. Customer Acquisition is another fast growing application, according to SMA, with more than two-thirds of insurers either using or planning to use big data for this purpose by 2016. Cloud is top of mind too, with 68 percent of smaller insurers and 38 percent of larger insurers considering cloud-based solutions.
"While big data adoption is increasing, organizational and technology challenges will hold insurers back and place insurers at risk in the competition for big data talent and the capabilities to leverage emerging technologies that are creating massive new data sources,” Denise Garth, SMA partner and lead author of the Emerging Trends in Organization and Technology report, added in the prepared statement.
The companion set of research reports are “Big Data in Insurance: Insurer Priorities, Projects, and Investment Plans for 2014” and “Beyond Big Data in Insurance: Emerging Trends in Organization and Technology.” The findings are based on a survey of 75 insurance professionals in North America and interviews with insurers and solution providers.
