5 Years, 5 Top Disruptors, One 800lb Analytic Gorilla - Novarica Study

One way to look at insurers' emerging technology investment priorities is to look at the forces shaking up their world. Novarica has taken this approach in its new study, "Top Five Disruptors in the Next Five Years for Insurers." The study is as interesting for its ostensible topic as for its subtext about the emerging impact of big data and analytics: its respondents' list of top five disruptors includes four that implicate big data and analytics and one that simply is big data and analytics.

Novarica is merely telling it like it is. The report first identifies the "Top Five Disruptors" (see chart below): Regulatory Change, Financial Environment, Shifting Market Needs, Increased CAT (catastrophe) Losses and Big Data and Analytics.

The analyst goes on to give examples of each, followed by "preparations," or potential solutions. Analytics are explicitly mentioned in three and implied two others. For Increased CAT Losses, Novarica recommends expanded data capture and refreshment of predictive models; Shifting Market Needs comprises an enormous range of activities, many of which have an analytical dimension. Matthew Josefowicz, the report's author, acknowledges as much on the section on Big Data and Analytics:

Big Data and analytics, which play a role in many of the other issues discussed here, were also cited specifically by many insurers as a general issue. Dealing with massive volumes of structured and unstructured data is a considerable technology challenge for which most insurers' IT infrastructures were not designed.

The report is nevertheless interesting for considering each of the disruptors in turn, along with Novarica's identified impacts and "preparations." The main graph provides a stark map of uncertainty, with regulatory imponderables dominating life insurers' concerns and shifting market demands driving anxious product and distribution channel creativity on the part of P&C insurers.

But there's still a covert lesson from the report. On the one hand, big data and analytics is there in black and white, as it were, as an explicit, bona fide disruptive force. On the other, it lurks as a kind of éminence grise of technological influence as insurers move closer to becoming digital enterprises and competing on analytics.

Significantly, there was a difference of only one point in how high Big Data and Analytics was ranked between life/annuities (13%) and P&C (14%). Here are some of the ways respondents to Novarica's survey are addressing this disruptor:

• Researching use of big data public sources

• We are learning the new technologies so that we can harness the power of big data for underwriting and marketing.

• Systems modernization

• Following developments and conducting limited R&D projects

• Establishing an infrastructure to support the volume [of data]

• Implement a framework for decision support

• Planning stages started

• We have two active pursuits with the named vendors in the space and recently installed an enterprise repository to migrate data.

[For another view on insurers' emerging challenges, see 2013 a Pivotal Year for Insurance CIOs: Gartner .]

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio