Enterprising Developments

6 Big Data Best Practices

Joe McKendrick
Insurance Experts' Forum, October 1, 2012

Can the insurance industry learn to love big data? Of course, it can—as well as it embraces the potential to pull diamond insights out of mountains of coal. But, as is the case across all industries, insurance organizations have only begun to just scratch the surface of what is possible.

A new white paper offered by Oracle puts it this way: “Big data is all about finding a needle of value in a haystack of unstructured information.” And, nicely enough, offers a diamond's worth of insight to the insurance industry within the paper: a use case.

In this paper, the use case is for applying big data to provide for personalized auto insurance premiums, based on data streaming in from telematics, combined with actuarial information. The challenge offered is the ability to offer low premiums, but only to customers who are the least likely to make a claim. On-board sensors “capture driving data, such as routes driven, miles driven, time of day, and braking abruptness. This data is used to assess driver risk; they compare individual driving patterns with other statistical information, such as average miles driven in your state, and peak hours of drivers on the road. Driver risk plus actuarial information is then correlated with policy and profile information to offer a competitive and more profitable rate for the company.”

The paper recommends adoption of the Hadoop big data framework for packaging up the mounds of sensor information, which is then loaded into a master data management framework. In this environment, information is accessible by business intelligence and analytic applications—as well as analysts themselves—across the enterprise.

Of course, Oracle's home turf is traditional relational database management systems, which handle structured data that typically comes out of transactional systems. This isn’t too far from most insurers, who are heavily invested in traditional database systems, and need to put these assets to work within the new big data realm. There's a place for both traditional databases, as well as the new breed of “NoSQL” databases, built to handle unstructured files such as weblogs, documents, videos and graphics.

As a result, the paper notes, new IT strategies are mushrooming, including “brute force assaults on massive information sources, and filtering data through specialized parallel processing and indexing mechanisms. The results are correlated across time and meaning and often merged with traditional corporate data sources.”

The paper outlines big data best practices that will meet the needs of insurance companies seeking to get more value out of the mountains of data now available to them:

1. Align big data with specific business goals: In a recent post here at INN, Pat Speer talks about the continued pressing need for business-IT alignment, and the leadership role such alignment affords for IT executives. It's important that this alignment applies to big data as well, to “base new investments in skills, organization, or infrastructure with a strong business-driven context to guarantee ongoing project investments and funding.”

2. Ease skills shortage with standards and governance: Since big data has so much potential, there's a growing shortage of professionals who can manage and mine information. Short of offering huge signing bonuses, the best way to overcome potential skills issues is standardizing big data efforts within an IT governance program.

3. Optimize knowledge transfer with a center of excellence: “Whether big data is a new or expanding investment, the soft and hard costs can be an investment shared across the enterprise.”

4. Top payoff is aligning unstructured with structured data: “By connecting high density big data to the structured data you are already collecting can bring even greater clarity.”

5. Plan your sandbox for performance: Sometimes, it may be difficult to even know what you are looking for. “Management and IT needs to support this 'lack of direction' or 'lack of clear requirement.'

6. Align with the cloud operating model: “Analytical sandboxes should be created on-demand and resource management needs to have a control of the entire data flow, from pre-processing, integration, in-database summarization, post-processing, and analytical modeling. A well planned private and public cloud provisioning and security strategy plays an integral role in supporting these changing requirements”

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

The Pitfalls of Using Assembly Line Methods to Create Software

Most of the time, when the business needs IT, it is for custom software development, just like creating a concept car.

Wearables and Gamification in Life Insurance Goes Mainstream?

With so many U.S. households still uninsured, insurers are going have to try new things to re-position their product, focusing on consumer needs.

Will John Hancock Vitality Transform Insurance?

The Vitality program integrates this information directly into the rewards, giving you credit for the exercise, just by virtue of reporting it.

Why Customers Should Want Innovative Insurers

At a time when confidence in the insurance industry has been compromised, innovative companies can break the mold.

Five Ways to a Positive User Experience

The user experience can make or break an application. Here are five ways to measure whether itís positive or negative.

Innovation & Insight Day Recap

The Insurance Team recognized fifteen model banks across five categories: Digital; Data Mastery; Legacy and Ecosystem Transformation; Innovation and Emerging Technologies; and Operational Excellence.