Analytics is a huge focus area for insurers, and according to Andy Pulkstenis, director of advanced analytics for State Farm, data infrastructure is the current hottest sub-topic to the larger analytics focus.
“2014 might have been the year of ‘big data’ as a buzzword, but 2015 was the year of ‘how do we deal with this?’” Pulkstenis says. “How do you create a server and infrastructure so you can leverage this information? There’s this increased interest in the relationship between the hardware and software for handling big data.”
That sentiment is echoed by Heather Wilson, AIG’s chief data officer, who says that she sees platform modernization as a major component of her plan to build a more data-driven insurer.
“We have a heavy legacy environment, and we’re also modernizing our infrastructure to make sure that we get the foundation right, she says. “We have quite a few planes in the air heading to the same destination, but all at different attitudes. We are rationalizing our environment and being methodical and thoughtful.”
In fact, core systems replacement – a trend for several years – is even crucial to insurers because they need to have the right platform on which to leverage big data, analytics, telematics and more, says EY’s Hollander.
“How are you going to take advantage of that data for underwriting and pricing?” he asks. “That’s where you see the rise of the data scientist. These types of data don’t have actuarial models behind them.”
Insurers are having more mature conversations about hot big data processing technologies like Hadoop and Pig, Pulkstenis says. But those aren’t the only tools at their disposal.
“In theory, there are these new open source code platforms that can handle the mammoth data sources,” he says. “But you have companies like SAS that are rolling out high performance tool kits as well.”
The reason 2015’s position as a “setup year” in terms of data infrastructure is so important is that insurers see the digital world expanding quicker than ever – especially the “Internet of Things” and want to be equipped to take advantage.
“There’s a continued industry-wide focus on evolving vehicle technology, and important things are happening in the non-auto space as well,” he says. “There’s a lot of discussion around smart homes and meters that can feed you new information. And there’s no regulation yet. What can we collect, how do we have to keep it safe, what are the responsibilities?”
“To me, the difference is touchpoints and interactions,” says Wilson. “With such a large P&C line of business at AIG, we need to use our data even more so, especially all of our own data. We’ve had to bring millions of data sets together to understand potential risk and risk that happened in other places that could impact a client.”
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