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E-commerce and everything digital places huge demands for storage capacity on insurers

While the jury is still out on matters such as the future of wireless or the viability of selling insurance on the Net, the verdict is in on data storage: Insurers need more of it.

As carriers move to e-communications to reduce cost, increase efficiency and gain knowledge about customers, there needs to be a place to store all of the data. And, with many regulators now accepting digital signatures as a binding form of authorization, insurance companies can further reduce costs by completing even more transactions electronically—with the attendant data storage requirements, as well.

"Once insurers connect to the Web, there are massive amounts of data that can be sent or received," says Jim Stathakis, storage solutions specialist, network solutions, at Hewlett-Packard (Palo Alto, CA). "Applications, claims information, tracking data and even pictures can be transmitted. The insurance business is going to be one of the largest industries when it comes to increasing storage capacity and requirements."

Insurance companies that already have online offerings are especially vulnerable to storage shortages and problems. "Everyone is feeling the pain, but the companies that are starting to offer online services are encountering storage issues," which include lack of capacity and storage management problems, says Tom Clark, board member of the Storage Networking Industry Association (SNIA, Mountain View, CA), and director of technical marketing for Nishan Systems, a San Jose, CA-based provider of IP network storage solutions.

Part of the problem, explains Clark, is that companies traditionally update batch systems and backup storage overnight. "In a 7/24 environment, it is hard to shut down," he says. "Companies are building the front-end systems online, but the back-end areas are strapped for capacity."

Another problem, says Dean Underwood, director of marketing, disk solutions, at IBM (Armonk, NY), is determining the capacity required for today's needs and tomorrow's anticipated growth. "Right now, there is no good way to anticipate growth," Underwood says.

Managing Growth

"With e-commerce, nobody knows when a transaction will occur, because the Internet is available 7/24. Also, the growth in storage is coming from all sides of the business, not just the Internet." Instead of just storing simple flat data files, companies want PDF documents, photos, Microsoft Excel and PowerPoint files and "all sorts of formats and file types," Underwood adds. And companies want all data readily accessible online.

Since storage is just becoming a crisis at most companies, it traditionally hasn't received much attention or, for that matter, technology dollars. "Everyone is playing catch- up when it comes to storage," says HP's Stathakis. "Five years ago when people thought storage, they bought another server. Companies...were just buying more disk space. Today, companies are switching from a server strategy to a networked storage strategy," where storage devices are connected not by a "hard line" or a parallel cable, but by an Internet or intranet connection, so information is accessible to more people across the network.

Stathakis says that in the coming years as much as 70 percent of a company's budget should be dedicated to storage in some form or another. He admits that the 70 percent figure may be wishful thinking on his part, but stresses, "IT budgets are going to have to tilt more towards storage. We are already seeing the money that was previously invested in servers going toward storage solutions."

However, with storage moving off of servers and onto a centralized, accessible storage device, managing storage can be quite a challenge. "We are trying to consolidate our storage and manage it as a resource so we can control it," says Mike Mandelbaum, vice president of information systems, Internet, Lotus and emerging technology environments, at Newark, NJ-based Prudential Financial ($371 billion in assets under management). "Storage utilization rates are not what they could be. We have a whole newly formed team that is focusing on storage management."

But finding the qualified people to manage storage can be difficult. "There really aren't enough storage managers out there," says IBM's Underwood.

Continues Mandelbaum, "What we have found is a whole new way to look at things when it comes to storage. It used to be that you would buy a computer and 'hang' storage on it. Now you buy storage and hang the computers off of it."

Traditionally, storage came in the form of a server that a certain number of PCs accessed—a typical LAN setup. Today, a storage area network, or SAN, is the remedy of choice for the storage deficient. "A SAN is basically the same thing as a LAN, except it is focused on storage," HP's Stathakis says. "Instead of having multiple servers connecting to PCs, a SAN is a network of storage devices, accessed by servers," he adds. The advantages of a SAN are greater scalability, availability and manageability, since multiple servers and LANs can access the storage device, rather than having each LAN with its own storage.

A scalable storage strategy is important for carriers as many increase e-interactions with agents, customers and business partners. "It is said there are 10 interactions with a customer for every transaction," says Martin Sinnott, director of e-business marketing at Teradata, a division of NCR (Dayton, OH). "Not only does a company have to store the interactions to create the case history—and obviously, the transactions—but a company can learn a lot from the interactions to improve service.

"The Net provides a wealth of information on what the visitor does on the Web," or click-stream data, Sinnott adds. "That gets recorded in a Web server's log," so a company can spot potential problems with a site, such as where users log off, he adds.

While it's true the "logging" of a single customer's visit is not a complex application that requires a massive storage allocation, collectively it can be a storage hog. For an example, Sinnott points to the Web site for the Weather Channel, The site receives almost five million page views per day, obviously more than even the largest insurance carrier gets. But the collective amount of data generated by the weather-surfers approaches 250 gigabytes of data per year, he says.

Prudential Financial is also tracking usage on its site, "We definitely want to have a trail of contact with the customer," Prudential's Mandelbaum says. "We are storing and analyzing the Web logs to see what types of paths customers are taking on the site."

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio

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