Storage for Web Transactions
Although storage is relatively easy for a simple Web offering of brochureware, today many insurers are looking to expand their online capability far beyond the typical agent locator functionality of first-generation sites. To do that, storing information and transaction data will be essential.
""We are trying to do as many transactions as possible in a self-service method over the Net,"" Mandelbaum says. ""That alone is increasing our storage needs.""
Murtz Kizilbash, group manager, insurance sales organization, Sun Microsystems (Palo Alto, CA), says that as insurers deal with increased competition from non-traditional sources, gaining efficiency will be vital. ""Having a customer self-service their policy is very efficient,"" he says.
However, online transactions, either self-service or a more traditional method, are not as common in insurance as in other areas of financial services, says Philip Faulkner, financial services group manager, EMC Corp. (Hopkinton, MA). ""Instead of a customer doing 20 or more transactions a month at a bank Web site, one or two transactions a month is more common in insurance, unless you are a really lousy driver, "" he says. ""But with insurance companies offering a broader range of financial service offerings, they will have to store much more information.""
Self-servicing also can lead to an increase in customer e-mail, something that is demanding more storage daily. ""E-mail is huge, as far as storage goes,"" HP's Stathakis says. ""Just think how much e-mail has grown in the past couple of years. E-mails now come with attachments, so not only is the number of e-mails increasing, but so is the size of the messages.""
Stathakis says that one of his financial services clients (which he declines to name) ""had its e-mail server storage capacity triple over the past 18 months."" Part of the reason for the increase is that employees are keeping e-mails for a longer period. The amount of data that has to be managed because of email ""is simply astronomical,"" he adds. His financial services client recently built a SAN to store the email, because the volume was becoming unwieldy on a traditional server.
Prudential is finding that e-mail is ""the largest storage hog,"" Mandelbaum says. ""Some e-mail files are as big as a gigabyte. That applies to internal and customers' communications. We have about five terabytes of data in the e-mail system. Every month that increases by 115 gigabytes.""
The growth of e-mail has Prudential's storage management team working to discover the best way to manage the growing demand. ""As the volume grows, things start to degenerate,"" Mandelbaum says. ""Large mailboxes take longer to back up and are harder to manage. As storage grows, we are beginning to worry about performance and how it could impact users.""
Luckily for insurers, storage costs are dropping fast. ""In terms of dollar per megabyte, the cost of storage is dropping rapidly,"" SNIA's Clark says. ""But companies have to buy more of it than before.""
For insurance companies, the increase in the need for storage and the lower per-megabyte costs will probably balance out. ""The cost of storage is decreasing at a rapid rate,"" Prudential's Mandelbaum says. ""But that won't continue indefinitely.""
And insurers have some unique storage requirements that already require massive storage availability. ""We store data for seven years,"" Mandelbaum says. ""We have to store things that involve all transactions and all communications we have with our customers,"" both agents and policyholders. ""We store e-mail, agent communications, letters, claims and many other things."" Letters and paper sent to Prudential are scanned to produce e-documents. All documents are stored as images, a format that requires more storage space than does plain text.
Not only do carriers store data for long periods of time for regulatory reasons, but insurers also like to have greater amounts of data available than do companies in other industries, says Randal Sagrillo, director, Internet storage marketing, Sun Microsystems. ""Insurers use the data to compute rates,"" he says. ""Actuaries like to have a lot of data to analyze to come up with solid conclusions,"" for new rates, products or other purposes, Sagrillo adds.
""Insurance companies always have believed that the law of big numbers is to their advantage,"" EMC's Faulkner says. ""They use data for actuarial purposes to determine risk. On the investment side of the business, the people like to see historical financial data to make sure the proper criteria are met for risk analysis.""
Because insurance companies need so much data, distinguishing between time-sensitive and non-mission critical data is important. For instance, recent transactionscall center logs and payment informationshould be readily accessible. However, does a company need to have older datafor example, the payments made on a policy in 1992at a CSR's fingertips? Probably not.
""The customer service and investment side of the house wants fast online access to information,"" says EMC's Faulkner. ""The other side of the insurance operation wants to keep files for a long time, but maybe never look at them."" The resulting architecture requires online storage for rapid retrieval and near-online storage for archiving older data. For long-term storagedata that does not have any value for analysis, but does have to be kept for regulatory purposesthere is another part of the hierarchy in data storage.
""Hierarchical storage management is important,"" SNIA's Clark says. Information needed for customer service could be stored on a storage array of hard disks (similar to a PC's hard drive, only larger), or on optical (CD-ROM) drives, although hard disks are faster than optical storage. Long-term storage can also be stored on hard disks, but generally companies use optical storage for long-term purposes.
For archiving, companies still can use tapes, which are inexpensive. However getting information from tapes, when needed, is a much slower process than getting it from hard disks or optical storage devices.
For an insurer, says IBM's Underwood, ""It is probably good to keep this year's and last year's transactions on high-performance media,"" for easy access. ""As the data ages, many move the data to lower performance media,"" such as tapes.
Prudential is using storage products from EMC and Hitachi (San Francisco) for online access. ""Today, we are using magnetic disks,"" Mandelbaum says. ""We store the data for a certain period of time and then move it to tape as it ages.""
But, even with all the complications, costs and managerial problems associated with electronic data storage, Mandelbaum adds, ""it is certainly a lot easier than storing things on paper.""
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