BOSTON--()--Despite the hype, insurers have been tepid in their adoption of Big Data to date, but a significant minority are planning to build the a specialized infrastructure for it within the next 12 months, according to a new research report released today by research and advisory firm Novarica. In addition, the study finds that an “Analytics Gap” may soon widen between larger insurers that can afford to invest in better analytical capabilities and midsize insurers who will be left behind.
“While data analysis has always been at the core of the insurance industry, legacy technology environments and business practices have inhibited the embrace of Big Data by insurers”
“While data analysis has always been at the core of the insurance industry, legacy technology environments and business practices have inhibited the embrace of Big Data by insurers,” said Matthew Josefowicz, Novarica Managing Director and Partner and co-author of the report. “But the hype around Big Data has renewed focus on ‘Little Data’ – traditional enterprise data and analytics – which is still an area of underinvestment for many insurers, especially midsize insurers.”
He added, “Our survey shows that 15-20% of insurers are preparing the technology infrastructure for Big Data in the near future.”
The report, Analytics and Big Data at Insurers: Current State and Expectations, examines the current and likely future state of analytics capabilities and the preparation for use of Big Data, or enormous volumes of internal and external structured and unstructured data. It is based on results of a survey conducted in April 2012 of 86 insurer CIO members of the Novarica Insurance Technology Research Council, a membership group of more than 300 senior insurance IT executives.
The survey’s data suggests that the booming interest in Big Data that has captured many other industries could overwhelm insurers who have yet to get a handle on structured enterprise data.
“Insurers can profit immensely from the value of Big Data if they have created a culture where business leaders trust analytics and act on the insights provided,” Josefowicz added. “All insurers should take steps to create the culture today if it doesn’t already exist in their companies.”
A free preview of the report including a discussion of key findings is online at http://www.novarica.com/reports_analytics_bigdata/
Novarica provides information, insights, and perspective on markets, operations, and technology to financial services and insurance executives. The company delivers its service through published research, retained advisory services, and project-based consulting. Novarica draws its knowledge from the personal experience of its principals, the ongoing information gathering initiatives of dedicated research staff, and regular communication with insurer executives through informal networks and through the Novarica Insurance Technology Research Council, a moderated knowledge-sharing community of more than 300 senior IT executives representing more than 275 North American insurers. More information at www.novarica.com