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Ravi Koka
Ravi Koka
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Why Insurers Should Pursue Big Data in the Cloud

The economics of big data in the cloud are compelling. Insurers that invest in cloud and big data could be big winners in the knowledge industry.

You can store all of the books available in the world in the cloud for less than a million dollars. One hundred terabytes of data, which is probably enough to store all of the data in a midsized insurance company, costs about $2,600 per month. The point is, for doing big-data analysis -- which requires analyzing large amounts of data -- loading it in cloud storage on demand and doing the analysis with powerful tools like BigQuery from Google makes economic sense. When I visited Google I was impressed when they did a BigQuery on all of Shakespeare’s works and found in less than a second that the word “love” was used 2,135 times.

[Previously from Koka: Customer Experience Starts With a Vision]

Loading data to the cloud
According to Wikibon big-data statistics, 48 hours of video are uploaded to YouTube per minute. This translates to 15 terabytes per hour. This got me to investigate how large amounts of data can be loaded to Google cloud storage. You can do this in real-time directly to Google BigQuery, which is a NoSQL database and stores data in columns. You can also load these as CSV files or JSON, and you could do batch loads of 1 terabyte with a limit of 10,000 uploads per project per day. This is a lot of data storage capacity at an economical cost, and insurers should surely look at doing data analytics in the cloud.

Powerful tools for analysis and putting data to work
More than data storage and the ease of provisioning this at affordable cost on the cloud, the availability of powerful tools like IBM Watson, Google BigQuery, Tableau, and ETL tools like Informatica and Talend makes it very productive for users to extract, cleanse, and analyze data in the cloud. Business users can realize their dream of IT on demand and not be frustrated about the time it takes to set up data warehouses and install and use business intelligence tools. Insurance is in the information business, and assessing risks and the probability of events that impact underwriting and claims decisions is of critical importance. Business intelligence tools could empower all users in their jobs, be it underwriting or claims assessment. This is analogous to when personal computers brought computing to everyone’s desk.

Anonymizing data to ensure privacy
In my earlier article, Insurers: Act on Cloud Now, I had identified data privacy as one of the reasons for insurers not moving to the cloud. However, help is on the way with tools that anonymize data. According to Wikipedia, data anonymization is the process of either encrypting or removing personally identifiable information from datasets, so that the people whom the data describe remain anonymous. The Privacy Technology Focus Group defines it as "technology that converts clear text data into a nonhuman readable and irreversible form, including but not limited to pre-image resistant hashes (e.g., one-way hashes) and encryption techniques in which the decryption key has been discarded.” Personal identification information like name, date of birth, and Social Security number could be suppressed using this technique.

Your digital strategy should lay emphasis on data
Most companies are in the process of putting their digital strategies in place and are looking at transforming their IT systems. While rationalizing IT and applications may yield operational efficiencies, the benefits that can be derived by mining data to improve business outcomes and grow sales are far greater. This could lead to quantum leaps in your business and position you far ahead of your competition. Walmart did this in retail with real-time data-on-demand and supply chain intelligence and was one of the first brick-and-mortar companies to leverage the power of digital networks and data analytics. Insurers who make the investment in cloud and big data could be the next big winners in this knowledge industry.

[Considering storage in the cloud? Learn more about it at the Interop New York session Making Cloud Storage Work For Your Organization, Monday, Sept. 29.]

Ravi Koka is a Partner and CTO Insurance products at Polaris Financial Technology Limited, a leading provider of enterprise software for the banking and  insurance industry. Prior to this he founded SEEC Inc. and successfully completed SEEC's IPO on Nasdaq in 1997. Koka ... View Full Bio

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Ravi Koka
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Ravi Koka,
User Rank: Apprentice
9/10/2014 | 4:22:42 PM
Re: Complexities of big data
I think a lot of insurers are looking at cloud cautiously. The cloud service providers are getting more mature and storage costs have dropped significantly. The availability of sophisticated analytical tools is the other factor and I don't beileve insurers have enough experience yet with this. I have heard of a few POCs but it is not mainstream yet
Kelly22
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Kelly22,
User Rank: Author
9/10/2014 | 1:07:49 PM
Re: Complexities of big data
True, I imagine the massive task of developing a strong big data strategy would prove intimidating to insurers. It really is necessary, though, especially as they face growing amounts of data each day. New security measures give insurers even more reason to look to the cloud for big data. 
KBurger
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KBurger,
User Rank: Author
9/10/2014 | 10:12:50 AM
Complexities of big data
Really good overview, Ravi. In addition to outlining the benefits of managing big data in the cloud, this also underscores just how complex creating and maintaining an effective big data strategy is. There's so much that goes into it in terms of infrastructure, storage, etc., before insurers can even begin to exploit the data and realize the potential benefits. I would imagine this could be very discouraging to many organizations. I guessing that one of the points of pursuing big data in the cloud is that the cloud can address these complex needs in a more cost-effective and "faster" way. Ravi, do you think most insurance companies understand this?
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