Other parts of this series:
- Poor data management threatens to hurt insurers in the digital economy
- As data soars in value, it’s time for insurance execs to step in and take the reins
- Data lakes and APIs provide insurers with the keys to unlock their data logjams
- Data governance is vital for insurers as they venture into the digital economy
- These five steps will help insurers get their data governance on track
Digital transformation has substantially increased the value of the data held by insurers. Data management is now a vital strategic practice that requires the attention of business leaders.
The digital transformation of the insurance industry has dramatically elevated the importance of data management. It’s no longer a utility function that’s the domain of the IT department. Instead, data management is a vital strategic practice that demands the oversight of business leaders.
Insurers that fail to properly respond to this shift are likely to impair the performance of their businesses. They’ll perpetuate operational inefficiencies, struggle to deliver the quality of service their customers expect and miss important business opportunities.
The ascent of data management is being propelled by four powerful forces:
Increasing value of data: Data is the life force of the emerging digital economy. Insurers need accurate, relevant and easily accessible data to make effective evidence-based decisions that will determine the performance of their businesses. A host of digital solutions, including analytics, robotics and artificial intelligence systems, have emerged to help business leaders use this data to curb costs, increase revenue and identify new opportunities for investment.
Expanding volumes of data: Tumbling storage costs and rising processing power are ballooning the amount of data available to insurers. The cost of a gigabyte of hard disk data storage fell from US$400,000 in 1980 to three cents by 2014, according to research firm Statistic Brain. It’s now less than two cents. Digital technologies such as the Internet of Things and big data, as well as high bandwidth networks and cloud computing, are delivering huge volumes of data to insurers.
Spread of data sources and destinations: Connected products, hyper-personalized services and more effective customer touch-points are providing insurers with a far broader range of data sources. Conversely, new ecosystem partnerships and business alliances are prompting insurance providers to distribute much more of their data with third parties.
Greater regulatory and risk requirements: Customers and regulators are insisting on ever-tighter controls on the collection, storage and distribution of data. Breaches of data security and the loss of trust among consumers, employees and shareholders can jeopardize the reputation, profitability and even the survival a company.
Traditional approaches to data management are unable to handle these big changes. Insurers need to rethink how they collect, store, manage, secure and use their fast-growing data resources. And the leaders of the business need to drive this process.
In my next blog post I’ll discuss two important technologies that can help insurers meet the rising demands of data management – data lakes and application programming interfaces (APIs).
Meanwhile, have a look at these links. I think you’ll find them useful.