One Size Does Not Fit All
When it comes to data storage in the insurance industry, there is no "one size fits all" solution. A variety of external and internal factors -- including regulation, mergers, agent/distributor requirements and management demands for more-efficient operations -- are driving insurers to rethink how they manage information.
For example, the intensifying regulatory environment means it is no longer enough for carriers to archive documents for a specified period of time and then discard them -- as evidenced by the fallout from high-profile legal cases such as the Spitzer investigations of AIG and Marsh. In addition, mergers and acquisitions have created a tremendous amount of redundant information at many restructuring organizations. Meanwhile, catastrophic events, such as the recent hurricanes, have forced insurers to rethink how they approach business continuity -- especially from an information management perspective.
As a result, insurers increasingly are embracing information life cycle management (ILM), a comprehensive strategy for information management that takes storage to the proverbial next level. "From a business perspective, by managing information, executives are building a comprehensive road map for executing their visions," says Seth Montgomery, a principal in the Minneapolis-based insurance technology practice of Deloitte Consulting (New York). "ILM is a framework, an approach to compliance, a decision driver, a way to get a handle on situations and growth as well as the overall customer experience."
ILM is a strategy to align business value with storage by applying policies, processes and tools to manage the flow of information from creation and initial storage to the time it becomes obsolete and is deleted. "Information" includes all documents, business transaction records, e-mail and other forms of correspondence, reports, and computer input and output. ILM's overall benefit is its cost-effective and functional centralization of archiving technology. "The single biggest benefit of ILM is that insurers can improve service levels while also reducing cost," says Ken Steinhardt, director of technology analysis for EMC (Hopkinton, Mass.), an ILM solutions provider.
In addition to EMC, vendors such as Microsoft (Redmond, Wash.), Cisco (San Jose, Calif.) and IBM (Armonk, N.Y.) offer ILM solutions. Many of these vendors -- including EMC, Princeton Softech (Princeton, N.J.), Symantec (Cupertino, Calif.), OuterBay (Cupertino) and Sensage (San Francisco) -- incorporate ILM-specific software into their offerings to automate storage categorization or e-mail and document retrieval.
ILM allows IT organizations to manage, protect, classify, retrieve and act on data. What makes ILM more complex than other storage techniques is that the technology often incorporates solutions from several vendors and automates data storage by organizing it into tiers according to specified policies. At the same time, retrieving files is sped up by the technology's ability to search stored files for a specific piece of data. This differs from data life cycle management or records management solutions that archive files by general attributes of age, size or type. "ILM is the ability to store information in a centralized manner so that when an agent or broker searches for a policy with the policy number, they are able to quickly find that policy, and can see the entire background of that policy and all of the information relating to it," explains Neil Weiss, director of insurance solutions at Mobius (Rye, N.Y.).
A tiered storage architecture enables insurers to manage information dynamically and seamlessly according to its changing value over time. "Tiered storage is a custom-built approach to classifying and managing data," explains Jim Geis, director of storage solutions at Forsythe (Skokie, Ill.), an infrastructure solutions provider and business consulting service. "There are two basic technologies used in ILM: hardware and software. The hardware holds information while the software manages the data pools. Expensive, high-performance transactional technology is on the highest tier and lower-cost technology on the lowest."
The first two tiers include devices where data is physically stored, such as disk drives, tapes and servers. The next tier consists of subsystems such as RAID (redundant array of independent disks) systems and tape libraries. These are built on top of storage devices to provide fault tolerance and primary storage backup, which make sure data that is being stored is stored reliably. Products on the higher tiers are networking components built on top of subsystems such as storage area networks (SAN). SAN systems automate archiving, organizing and retrieval.
Abundance of Redundancies
Tiered storage helps insurers manage information effectively, explains Deloitte's Montgomery. "There is so much information insurers have to hold on to for compliance reasons, and a lot of the data is redundant," he notes. "So, many executives are looking for ways to wrap their arms around it."
Automating data migration among tiers of storage is an option that Bob Venable, manager of enterprise systems at Chattanooga, Tenn.-based Blue Cross Blue Shield of Tennessee (BCBSTN; $2.3 billion in total premium), is investigating. His goal: Manage storage more efficiently by eliminating redundant applications and documents. Having seen other carriers make investments that haven't shown much return, however, Venable is concerned about avoiding ILM hype. "The industry seems to be making a headlong rush toward tiered storage, and the danger is that carriers are winding up with more applications to manage," he explains.
Venable describes his current storage environment as a massively shared infrastructure in which IBM's DB2 Content Manager and Tivoli Storage Manager (TSM) share the same disk, library and backup systems. "This year, we are looking for a cross-platform solution," Venable says. "So far, we have done real well at managing everything manually, but a content-addressable file system would automate that process, making it more efficient."
To find the best storage solution for the company, Venable formed an internal group in which members from human resources, legal, IT and the business department collaborate. "We formed the group back in 2004 to come up with a cost-effective solution that would benefit all parties involved," he says.
The deliberate road map BCBSTN is following is a necessary step to investing in storage wisely, explains EMC's Steinhardt. "Insurers have to have the courage not to create ILM all at once," he says. "Start with the bits and pieces -- maybe e-mails or claims -- then the processing systems. Look at the big picture and build toward the final stages."
Keep It Regulated
Not only can ILM help carriers automate their document and data-retention policies, it also can facilitate compliance efforts and safeguard against possible litigation. Regulations such as HIPAA, Sarbanes-Oxley (SOX) and the Gramm-Leach-Bliley Act have provisions designed to protect the privacy of client information. They require organizations to maintain information for a specific amount of time in a retrievable fashion. For instance, HIPAA requires carriers to keep records two years post-mortem (that is, after the information has become obsolete). "There are multiple types of regulations, and to abide by all of them, insurers need to effectively mine their data so information can be easily retrieved," says Forsythe's Geis.
BCBSTN already has been able to achieve enterprise compliance goals. Last year, the carrier invested $1 million to implement IBM's Web-based DB2 Content Manager and iLumin's (Reston, Va.) Assentor Enterprise Suite software to automate document and e-mail retrieval. Previously, BCBSTN had been retrieving and storing documents and e-mail manually using TSM.
While the IT group still is in the process of populating personal documents and e-mails into DB2 Content Manager, BCBSTN already has seen benefits, Venable reports. "Because of this system, we can efficiently store and retrieve all documents by query, satisfying our legal requirements," he explains.
Compliance requirements also convinced Irvine, Calif.-based auto insurer Western United Insurance Co. (250,000 policies in force), a subsidiary of California State Automobile Association (CSAA; San Francisco; $2.5 billion in total assets), to make a significant investment in storage and ILM, according to Nelson Allen, the carrier's VP of IT. "To comply with the industry's regulations and our own data-retention policies, we needed a data storage system that could handle large volumes of data while at the same time offer the quick and easy retrieval of documents," says Allen.
Because Western United already owned Mobius' ViewDirect Total Content Management solution, Allen wanted to go with a storage vendor that could integrate the Mobius system. So in 2004, Western United invested in EMC's Centera network-attached storage, an archive that extends a WORM (write once read many) compliance layer to documents so they cannot be modified until a retention period is met.
Western United was able to install Mobius' ViewDirect Total Content Management to automate storage and data retrieval on EMC's Centera. "Once the document is a certain age, it's automatically archived to EMC Centera," Nelson explains. "Agents like the system because it's easy to use -- they can search the document database by policy number or last name and find the exact document they are looking for."
So far, Western United's investment in ILM has paid off, according to Allen. "We've seen a large drop in off-site tape storage costs," he says. The next step for the insurer is to incorporate disaster recovery capabilities into the system. To do so, according to Allen, Western United will purchase another EMC Centera device this year for off-site replication.
Information Life Cycle Management
Improving Information Improves Business
Information management optimizes a company's financial performance, according to a study conducted by Deloitte Consulting (New York). The research -- based on a survey of 385 senior finance and IT professionals in the United States, Canada, Europe and China -- reports that 81 percent of the executives polled believe that improving information quality would allow them to make better operations decisions in a shorter period of time. "Having more-comprehensive and faster access to information at whatever stage of the life cycle is what is driving insurers to ILM," says Seth Montgomery, a principal in Deloitte's insurance technology practice.
More than half of the survey respondents also agreed that improving the quality of information would give them greater confidence in business process controls, improve annual planning and management decisions, and aid in mitigating enterprise risk. "Information management requires strong executive leadership, and ILM helps build a strong governance model internally, allowing organizations to be tactical and augment the use of information," Montgomery explains. --M.W.
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