Unleashing the Power of Data:

In the ever-evolving landscape of the insurance industry, the digital transformation is in full swing. To stay competitive and relevant, insurance companies are increasingly turning to data as their most valuable asset. Data is not just information; it’s a powerful tool that insurers are using to mine customer insights, expand their market share, enhance operational efficiency, reduce risk, and develop personalized products and services at unprecedented speeds. However, this digital revolution brings with it a pressing need for insurance companies to modernize their data environments. The adoption of a modern data platform is a critical step on the journey to becoming data-driven in an industry that is rapidly changing. 

Why modern data platforms have become a crucial necessity for insurers and how they’re shaping the future of the industry: 

The Data-Driven Evolution 

• The rise of Big Data: In today’s world, data generation has reached unprecedented levels. With the proliferation of smartphones, IoT devices, and digital interactions, insurers are being inundated with vast amounts of data. From telematics data revealing driver behavior to wearables monitoring health metrics, insurance companies have access to a treasure trove of information. To extract insights and stay competitive, they need advanced data processing capabilities. 
• Customer-centricity: In an era of customer-centric insurance, understanding policyholders is paramount. Modern customers demand personalized experiences, tailored policies, and instant communication. Gathering, analyzing, and acting on customer data is crucial for retaining policyholders and gaining a competitive edge. 
• Risk assessment and underwriting: Insurers depend on accurate risk assessment to determine premiums and payouts. They need access to diverse datasets to evaluate potential policyholders comprehensively. This includes not only traditional data but also unconventional sources, like social media profiles and online behavior. Modern data platforms empower insurers to consider a broader spectrum of data points when making underwriting decisions. 

The Challenges of Traditional Systems 

Legacy systems: Many insurers still rely on outdated legacy systems. These systems were not designed to handle the volume and variety of data they encounter today. They’re rigid, complex, and incapable of supporting the agility that digital-era insurance demands. 

• Data silos: Insurers often suffer from data fragmentation. Diverse data sources remain isolated within different departments, inhibiting a holistic view of customers and risks. A Modern Data Platform can integrate these siloed data sources, providing a unified and real-time perspective. 
• Lack of automation: Traditional systems are manual, leading to inefficient data processes. Tasks like data entry, data cleaning, and data integration are time-consuming and error-prone. Automation through modern data platforms can expedite these processes and reduce human error. 

The Role of Modern Data Platforms 

• Agility and flexibility: Modern Data Platforms allow insurers to scale their data up and down based on business needs. They’re designed to accommodate various types of data, from traditional sources to unconventional ones like wearables and IoT devices. Insurers can adapt to changing data requirements and seize new data-driven opportunities. 
• Data management: A modern data platform facilitates centralized data access, enforces rules and standards for data curation, and ensures security and compliance. This enables streamlined data management processes, empowering insurers to optimize their operations and deliver more efficient services. 
• Advanced analytics: Modern data platforms provide insurers with the tools they need to leverage data effectively. Machine learning and artificial intelligence capabilities enhance data analytics, enabling insurers to extract actionable insights. These insights can be utilized for better risk assessment, product development, customer segmentation, and more. 
• Cloud data warehousing: Cloud data warehouses are gaining traction in the insurance industry. They offer scalability, storage, and access to innovative tools for data computation. Insurtechs have been at the forefront of adopting cloud technology to disrupt legacy companies, but incumbent insurers are catching up. Cloud data warehouses empower insurers to leverage diverse data sources and new technologies, such as AI and ML, to maximize data analytics. 

The Challenges of Establishing a Modern Data Platform 

As insurance companies embark on the mission to modernize their data environments, they face a host of challenges that must be addressed. These challenges encompass the realms of data organization, governance, and security, as well as cultural inertia and the burden of legacy architectures. 

1. Managing Data Organization, Governance, and Security 

One of the most significant challenges in modernizing the data environment is the complex nature of data organization, governance, and security. Many insurance companies grapple with the presence of multiple legacy core systems, which hinder their ability to integrate data from various sources seamlessly. Siloed data centers further exacerbate the problem by impeding data harmonization and consolidation. This results in compromised data quality, governance, and security. A modern data platform can address these issues by ingesting and processing real-time, streaming, and high-volume data, such as telematics, which enables insurers to introduce and update new products and services rapidly. Such platforms excel in optimizing data volume, variety, and velocity. 

2. Overcoming Cultural Inertia 

In the pursuit of data modernization, insurers must confront not only technological challenges but also cultural inertia within their organizations. While insurers are quick to focus on selecting and implementing technologies for data management, they often underestimate the importance of addressing cultural challenges. A modern data platform can bring limited benefits if it is improperly used or underutilized. To fully leverage the platform, insurers must educate their IT and business teams about how it can simplify and standardize day-to-day operations and provide new tools and capabilities to enhance business processes and outcomes. 

3. Evolving Beyond Legacy Architectures 

Insurance companies that remain reliant on outdated architectures will struggle to harness the full potential of data and the innovative tools that can drive their business growth. A modern data platform is designed from the ground up to accommodate advanced data capabilities through the Internet of Things (IoT), handle multiple customer data touchpoints, optimize decision-making, automate key processes and testing, and develop self-service business intelligence that distills actionable insights for business benefits. It is essential for insurers looking to participate in the new digital economy and remain competitive in a rapidly evolving industry. 

A 3-Step Framework to a Modern Data Platform 

The journey to establishing a modern data platform hinge on addressing three key areas: data architectures, data management, and data warehousing. 

1. Upgrading Data Architectures to Enable Agility and Flexibility 

Many insurers are burdened by legacy systems, on-premise servers, and siloed data in various formats that hinder efficient accessibility. While advances in artificial intelligence have expanded the capacity to collect real-time data, legacy sources often fail to process the diverse range of data available to insurers. Insurers must adopt data architectures capable of accommodating both traditional and nontraditional data, such as paper forms, smartphones, videos, wearables, drones, and more. Effective data architectures enable insurers to scale their data up and down as per their business needs. 

2. Standardizing Data Management to Optimize Operations 

In addition to efficiently storing vast amounts of data, insurers struggle with data management. Organizing multiple data streams, including historical enterprise data and third-party sources, and enabling analysis can be labor-intensive. Automation powered by artificial intelligence and machine learning is crucial to streamline data management. Advanced delivery methods like Agile and DevOps further enhance data management systems, maximize continuous integration/continuous delivery, and accelerate speed-to-market for new capabilities. Centralizing data access, defining rules and standards for data curation, and ensuring security and compliance are essential for proper data management. 

3. Implementing a Cloud Data Warehouse to Provide Scale and Innovation 

As data sources and volumes grow, the ability to scale, store, and access innovative data computation tools becomes increasingly vital for competition. While insure-tech companies have been quick to employ data technology to disrupt legacy insurers, incumbent insurers are now transitioning to cloud infrastructures to support their data initiatives. Cloud data warehouses have emerged as a platform of choice for many insurers. These platforms enable insurers to leverage diverse data sources and new technologies in artificial intelligence and machine learning to maximize data analytics. 

Splenta Systems expertise has been in helping insurance organizations navigate Modern Data Platform to stay ahead of the customer trends.

Conclusion: A Modern Data Platform for the Future of Insurance 

The insurance industry recognizes that data is pivotal in the age of digital transformation. Despite the challenges on the road to data modernization, a modern data platform stands as the essential first step. By addressing issues related to data organization, governance, and security, overcoming cultural inertia, and evolving beyond legacy architectures, insurers can pave the way for a data-driven future. 

As insurers adopt data architectures that enable agility and flexibility, standardize data management to optimize operations, and implement cloud data warehouses for scale and innovation, they will not only keep pace with the digital age but also lead the way towards a future of insurance that is data-driven, efficient, and competitive. The journey to a modern data platform is a crucial path to unlock the full potential of data in the insurance industry and embrace a digital, data-powered future.