Big data technology in insurance to rise 55%

Insurers and other financial organisations are expected to increase their spending on big data technology by 55% between 2014 and 2016, according to Celent.

The analyst said companies within the sector were under growing pressure to improve risk management systems, analysis and reporting and that big data technology was providing a solution.

The Big Data in Risk Management report claimed that as these tools mature they will be integrated into existing enterprise-wide systems and spending would rise. Celent projects investment levels in North America will increase from $470 in 2014 to $730 in 2016.

“In the recent financial crisis, many market participants and regulators discovered that their data architecture and IT systems could not support monitoring and managing a broad spectrum of risks, the report said. “Regulators want more frequent reporting of a wide variety of risks and expect firms to be able to respond quickly to ad hoc requests. To meet more timely and detailed management and regulatory requirements, firms are increasingly investing in open source software solutions and sophisticated data management tools such as in-memory databases and analytics.”

The analyst firm added that companies could gain valuable insights by adding new sources of nonfinancial data to their risk management models. Although Bill Fearnly Jr, senior analyst at Celent, cautioned firms to start with controlled pilot projects ‘that can be scaled for use by other groups and functions within the firm’.