Insurers See Big Data Replacing Enterprise Warehousing

At our 8th annual Novarica Insurance Technology Research Council Meeting, we had some great conversations about data, both as part of the formal event agenda and also via informal discussions during breaks or meals. Many of the trending or future technologies being discussed (Internet of Things, wearable devices, social media) from an insurer perspective are really just more and bigger channels of data. And just in case you think insurance data is lacking in thrills: my favorite story of the day was about auto insurers looking for fraud or stolen vehicles by integrating data feeds from the license plate scanners used by bounty hunters.

At the analytics breakout session I had the opportunity to sit around a table with CIOs from a variety of insurers of different sizes and lines. One thing that struck me was how much big data and big data technology is part of the conversation. Novarica typically urges caution when asked about big data, stressing that insurers shouldn’t go looking for a use case to fit a technology. But it seems that more insurers are finding the use case which leads them towards a big data approach, and it raises questions about the future of the enterprise data warehouse.

Building a data warehouse with a single data model that supports the whole business is notoriously difficult, with a success rate that drops as the amount of data and number of lines of business get larger, until becoming a near impossibility. A big data approach allows bringing together many different data sources with different structures without having to go through the normalizing and cleansing process that often derails EDW projects. While both approaches have value, larger insurers are discovering the big data route may be their only option for cross-business analysis. And some smaller insurers see this as a way to rapidly gather and review data as well, often running side-by-side with an existing data warehouse. In fact, in at least one case, an insurer’s big data lake has become the first step in the data workflow, with a data extraction from it feeding the older data warehouse as a way to maintain legacy processes.

We’re currently reaching out to the Novarica Insurance Technology Research Councilwith a survey about analytics and big data, so will be reporting soon on just how many insurers have taken a big data approach. But even though we expect the percentages to remain small, it’s clear the growth will continue. The tools and options around big data are increasing and more vendors are providing services that make it easier for insurers to leverage big data tech without having to build it from scratch themselves. In time, I expect to see more insurers running a big data project alongside an enterprise data warehouse, and, in some cases, taking over as the hub of that insurer’s data.

This blog entry has been republished with permission.

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