Innovative analytical tools and high-performance computing are providing insurers the means needed to analyze huge volumes of unstructured data. In this Risk.net article (subscription required), Milliman’s Neil Cantle discusses how these advances offer carriers a more sophisticated approach in analyzing inherent risks and developing best business practices.
Here is an excerpt:
Many of the new generation of tools for unstructured data were initially developed to enable search engines such as Yahoo and Google to tackle the vast resources of the web. Key among these is the Hadoop framework for the management and processing of large-scale disparate datasets on clusters of commodity hardware. Hadoop has a number of modules for such things as distributing data across groups of processors, filtering, sorting and summarizing information, and automatically handling the inevitable hardware failures that arise in large computing grids. All of the technologies mentioned are open source, which means they are free and readily available, and they are also supported by many proprietary commercial extensions and equivalents.
The breakthrough with new data sources and tools is the ability to query things for which the data has not been organized in advance. This can reveal new patterns, trends and correlations that can be helpful in managing risk and spotting opportunities, says Neil Cantle, principal and consulting actuary at Milliman, based in London.
… “[The new data capabilities] enable insurers to look more broadly and deeply into the world in which the policyholder lives without necessarily being specific about the person, and allow them to start making inferences about an individual and their behavior,” says Cantle.
The article also focuses on the emergence of data scientists who are entrusted with mining new data sources. Milliman’s Peggy Brinkmann expounds on data science and the techniques data scientists use to extract value from large amounts of information in her paper “Why big data is a big deal.”