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Creating a Repository For Data Integration
June 2007Basic data integration, the act of extracting, transforming and loading (ETL) structured data from disparate systems into a single data store so it can be manipulated and evaluated, carries with it certain logical elements and processes.
In today's insurance IT department, however, the vast amount (approximately 80% according to experts) of new data being generated is unstructured, (Web, VoIP, IM and e-mail) and being lopped into data silos that are growing exponentially. Integrating structured and unstructured data brings with it yet another layer of complexity.
Add to that some of the nuances inherent to the insurance industry: numerous product lines, each with its own anthology of regulatory compliance, state-by-state rules and multi-layered reporting requirements.
"I'm seeing the insurance industry as being 10-15 years behind everyone else as a result," says David Egbert, CIO at Markel Corp., a Glen Allen, Va., provider of specialty line insurance. Egbert, who spent several years in consumer electronics goods before joining Markel, brings a different perspective.
"You would never see the typical insurance carrier's technology at Wal-Mart," he says. "They have to have end-to-end systems. If you compared how a consumer goods company operates, an insurance company's data integration project would have to take a broader look at the supply chain and combine data, from wholesaler through to claims."
Yet it is because of the industry-specific complexities that insurers' integration activities are on the rise, says Donn Vucovich, managing director and practice area leader for business technology solutions at Chicago-based Navigant Consulting.
HOW BAD IS IT?
Vucovich maintains that increased regulation and control, regulations around data access and retention, and the information lifecycle associated with data and application integration have the potential to force carriers to deal with reality.
"People are seeing how bad their data is," he says. "It's located on several platforms, sometimes in duplicate form, and often it's not up-to-date, relevant or complete. We all kind of knew it, but now that we are being forced to go through it, significant efforts are going into data quality."
Vucovich admits that the insurance industry is still in Phase I but not because funding is limited.
"Insurance boards are starting to respond prudently, because they now understand that we must fund regulatory efforts and the best way to do that is to have new ways to work with our ever-growing stores of data and information," he says.
A recent Web poll conducted by Insurance Networking News confirms Vucovich's point: When asked to cite the No. 1 challenge to data integration efforts, only 27% of respondents cited a lack of executive-level buy-in, and 23% cited lack of budget and tools. The remaining 50% of respondents cited the many silos created from legacy systems as being the biggest challenge.
Vucovich confirms the enormity of both data and enterprise application integration (EAI) initiatives, which often spin into multi-year projects.
"It's very disciplined-not a one-off approach," he says. "And it is a business process management issue. You have to analyze and structure what you want to do, and there's a good deal of deep thinking that goes into the creation of indexes, the meaning of data, etc."
NEW OPPORTUNITIES
On the upside, a data integration project opens the door to other opportunities, says Vucovich. "Carriers are leveraging these efforts and tying them to operational and front office efforts," he says.
Egbert reports that, like most insurers, his company has several legacy systems that hold structured and unstructured data, making Markel prime for data integration at some point in the future.
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