When German armored columns unexpectedly smashed into Allied lines during The Battle of the Bulge on Dec. 16, 1944, many American cooks and clerks—long accustomed to the relative safety of the rear—found themselves hastily pressed into front line duty. In a similar, albeit less dire manner, the storage backbones of insurers—long thought of as a purely back office function—are now being tasked with many functions few would have envisioned years ago.

There are many reasons for this shift in the way data is warehoused and managed. One obvious reason is that the sheer volume of data insurers must now keep is forcing them to assess their strategies to store it. Insurers are storing increasing volumes of auditing and usage data, notes Jeff Goldberg, a senior analyst at Boston-based Celent. In addition to these and traditional policy and claim data, carriers must store other types of data.

“It’s a steady increase on two fronts,” says Craig Lowenthal, EVP & CIO of New York-based NYMAGIC Inc., which as a specialty lines company, doesn’t see the level of policy volume as do other carriers, but is noticing an uptrend in storage needs nonetheless. “One is from the imaging side, we image everything and document imaging takes up more space than standard data. Also, e-mails keep coming and the attachments keep getting bigger.”

Another reason is the increasing demand from regulators, rating agencies and lawyers for access to a carrier’s data. With enterprise risk management becoming a greater priority for carriers, even areas such as archiving and business continuity are meriting more attention. “The trend is toward more regulation and compliance, which is resulting in more non-discretionary spending on storage-related technologies,” says Rockwell Bonecutter, managing partner, North America data center technologies and operations, for Bermuda-based Accenture LLC.

Fortunately for CIOs spending that money, steady advances in technology have given them broader options when it comes to enterprise storage. Servers based on multi-core processors from Intel and AMD, along with advances in virtualization, now allow companies to to run multiple virtual machines on a single server. Moreover, vendors are increasingly bundling storage with other functionality such as enhanced security and analytic capabilities.


NYMAGIC’s Lowenthal was eager to avail himself of these new technologies when he joined the company in April of 2007. “When I started here, our server farm and storage was out of control,” he says. To remedy this, Lowenthal purchased virtualization software from Palo Alto, Calif.-based VMware Inc. and paired it with a storage area network system from Eden Prairie, Minn.-based Compellent Technologies Inc. in order to virtualize both servers and storage. “We get great functional capability out of this platform,” he says. “Not only can we quickly respond to the demands of our business and developers, we can more efficiently and cost effectively manage our data center.”

NYMAGIC currently has a production system that consists of three dual quad-core servers that house about 18 virtual servers. They also have a QA and development platform that consists of 12 virtual servers housed on one physical server. Lowenthal says that he is currently in the process of acquiring two more VMware-based physical servers—one for QA and development and another for disaster recovery.

According to Lowenthal, one of the primary benefits of using virtualized servers for storage is that they give system administrators a great deal of flexibility when it comes to allocating storage. “It’s certainly the way to go because you can parse out whatever storage you need to the virtual servers,” he says. “Before [virtualization] you would max out a server but still have extra disk space somewhere else. Now you have one centrally located place to manage your storage.”

While the ability of virtualization to increase server utilization is well known, another often overlooked advantage is speed. “Where it used to take a few weeks to implement a new server, we can now do it in less than day,” he says. “It’s made our development team happy because they get quick turn around on a server and don’t have to wait as long.”


Yet, presently, insurers taking full advantage of virtualization may be more the exception than the rule, claims Bonecutter. “The uptake of storage virtualization is pretty slow within the insurance sector, but it’s starting to get more of a foothold.” he says. “It’s still viewed as an emerging technology. You see more of it on the server side; I just think it’s taking a bit longer on the storage side.”

What’s more, Bonecutter says, for all of the promises of major savings made by virtualization proponents, he has yet to see much evidence of it removing operational cost from balance sheets. “All that it’s done is provide more flexibility, but it has added complexity,” he says. “You’re lucky if it’s been neutral from a cost perspective.”

Bonecutter says carriers must re-architect tangled legacy environments to reap the full benefits of implementing new storage technologies. “That’s when you start making substantive, meaningful changes to the storage environment,” he says. “It has a longer-term payoff then just going in and adding another storage array that’s more energy efficient or one that utilizes virtualization. It’s really about what you are going to do with that data and how you’re managing that data.”

Celent’s Goldberg concurs that how data is stored is less relevant than how it is used. “The problem in the insurance industry has not necessarily been that there is not enough data around,” he says. “It is that it is not being stored intelligently, so that data doesn’t give you the all the value that you could get from it.”


Rick Morton, industry VP, financial services, insurance and healthcare for Miamisburg, Ohio-based Teradata Corp. says the notion of data warehousing is evolving as insurers use the same copy of the data for different functions throughout the enterprise, including as a feed stock for business intelligence and predictive analytics.

Indeed, the move to service-oriented architectures has reinforced the need for carriers to make their data modular and readily accessible, blurring the once clear distinction between back and front office.

“Traditionally, data warehousing and analytics were back office functions,” Morton says, “Why can’t you use that same information to drive some of your front office decisions?”

Morton says insurers are now looking to build a centralized enterprise data warehousing. “They integrate information that was not integrated previously and integrate that data across lines of business,” he says.

This move toward a unified data repository is fortuitous given the advent of consumerism in insurance. Due to increased expectations from customers, data residing in storage area networks needs to be instantly available for customer service representatives, or even the customer. “There’s a migration to more customer-centric IT solutions,” Bonecutter says.

To get a view of this marriage between data and customer-centrism, look to Boston, where Steven Fox, VP of provider network management at Blue Cross Blue Shield of Massachusetts (BCBSMA), is in the process of enabling his customers to have access to claims data that was previously garrisoned in the back office. “It was really a requirement in the market—accounts were asking for it,” Fox says. “When we began to think about if we really wanted the consumer to own the data, determined we needed to look at a tool that was outside of our walls.”

In June, BCBSMA inked a partnership with Google Health, which enables BCBSMA members to download claims data in order to create their own personal health record. Fox says the move is part of a comprehensive e-health strategy for the company. “We wanted to find an integrated way to work with our members and providers,” he says. “The imperative was to use the power of health information technology to empower consumers — in this case, our members — to take the best care of themselves by sharing information. We don’t always assume that they will come to our site.”

Fox says the move to integrate the claims data with the Google Health interface has been swift and straightforward, with all the work being done remotely. “Most of what we’ve already built in our infrastructure we think we can reuse here,” he says. “Health care is the last place that consumerism and technology have taken hold, and I think that its time is coming.”

(c) 2008 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.

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