In many ways, the insurance industry has always revolved around data. In the past, this meant insurers using historical data, paired with inferences about the future, to gauge risk as accurately as possible and make informed underwriting decisions.
What’s changed within the last few years is that insurance companies now have access to much greater volumes of data than ever before, from a much wider variety of data sources. In addition, this data is now available in real time, meaning that insurance companies no longer have to make assumptions about the future based on the events of the past. Examples of these new real-time data sources include telematics devices that provide detailed data about how customers are driving and maintaining their vehicles.
Real-time data represents both an opportunity and a challenge for insurance companies. They now have access to insights they can use to make better decisions, quicker. However, many of those companies are still running legacy IT infrastructure that simply wasn’t designed to handle the volume and velocity of data created by modern real-time data sources. To take advantage of real-time data without getting overwhelmed, insurance companies must modernize their digital infrastructure.
6 Emerging Trends Faced by the Insurance Industry
Learn How an Interconnection Oriented Architecture® Can Help Address ThemDownload the eBook
Rearchitecting digital infrastructure for the future of insurance
In order to make the most of real-time data, insurance companies must go from a siloed, centralized approach—where all data traffic passes through a single data center hub—to distributed, interconnected digital infrastructure. This is what we at Equinix call an Interconnection Oriented Architecture® (IOA®), and it can help insurance companies get closer to data sources at the digital edge. As a result, they’ll have no difficulty aggregating the massive volumes of real-time data available to them and then feeding that data into analytics applications to derive valuable business insights.
A key part of any infrastructure modernization initiative is being able to connect with partner ecosystems quickly and flexibly. We live in an interconnected digital world where relying solely on internal innovation simply isn’t good enough. Leading businesses recognize the need to tap into new capabilities and services from their partner ecosystem. To do this, they must be able to move data back and forth to those partners quickly and reliably. This is why interconnection services will play such an essential role in enabling the future of data-driven insurance.
Replacing public internet connectivity with a private, dedicated interconnection service allows insurers to transfer data from one location to another via the quickest, most direct route possible. This helps ensure higher performance and greater reliability. In addition, insurance companies can use interconnection to transfer sensitive data without ever placing it at risk of being exposed. This allows them to handle customer data in a manner that complies with all applicable data protection and sovereignty regulations.
For this reason, it’s no surprise the 2022 Equinix Global Tech Trends Survey (GTTS) found that 59% of IT leaders said they planned to increase their spending on interconnection services this year.
Real-time data enables the shift to risk reduction
The growing availability of real-time data is contributing to a fundamental shift in the services that insurance companies can offer customers. Traditionally, insurance companies have accepted risk as an inevitability, and have offered coverage to help customers protect themselves against that risk. Now, they can use real-time IoT data and AI/machine learning capabilities to unlock predictive analytics capabilities that address the root causes of risk, and then offer risk reduction strategies to their customers. In short, real-time data can help insurance companies go from reactive to proactive.
Of course, insurance companies can’t make this fundamental shift without changing their digital infrastructure accordingly. The infrastructure requirements of IoT and AI are inherently different from those of conventional IT, in large part due to the volumes and varieties of data required. In the case of AI, training accurate models requires massive amounts of data. It’s also an extremely repetitive process: to remain accurate over time, those same models need to be retrained frequently using newer, larger data sets.
For this reason, digital leaders have recognized that positioning compute infrastructure in proximity to data sources is much more effective than moving all that data back and forth to the compute. The best way to do this is with a hybrid multicloud architecture built on cloud-adjacent digital infrastructure. This allows insurers to tap into the cloud providers of their choice on demand for greater flexibility and scalability when they need it, while also avoiding the higher costs that may result from placing large volumes of data directly into cloud storage.
Some pioneering insurers are even taking steps to reduce covered losses or, in certain circumstances, prevent them from occurring in the first place. By leveraging advanced analytics capabilities, the massive volumes of experiential data already available to them, and real-time information from a wide variety of sources, insurers can become trusted advisors by helping customers identify high-risk situations and proactively address them. Examples of this could include feeding real-time insights to autonomous vehicles to stop car accidents from happening, or using IoT data to recommend predictive maintenance when a particular factory component is at risk of failing.
Platform Equinix gives insurers the digital capabilities they need to thrive
As the world’s digital infrastructure company™, Equinix can help insurance companies make the changes they need to thrive in the modern digital business landscape. Platform Equinix® offers a global colocation footprint that includes more than 240 facilities in 70 different markets, many of which offer cloud on-ramps to leading hyperscalers. Equinix also partners with more than 3,000 cloud and IT service providers and 2,000 network service providers, so there’s a very good chance the providers you plan to integrate into your digital ecosystem are already at Equinix.
With software-defined interconnection capabilities from Equinix Fabric™, insurance companies can simplify hybrid multicloud networking by connecting to cloud providers and other technology partners in a matter of minutes. Insurance companies can also use our intuitive web portal to quickly update virtual connections to keep up with rapid changes in the market and shifts in customer demand.
Finally, Equinix Metal® can give insurance companies dedicated Bare Metal as a Service capabilities when and where they need them. This allows them to deploy single-tenant compute and storage capabilities in proximity to end users and data sources at the edge, and thus unlock the full power of modern digital applications. These virtual solutions can replace CAPEX-intensive physical hardware deployments, thus optimizing business agility and cost-efficiency.
To learn more about the digital trends that are reshaping the insurance industry, and how modernized digital infrastructure can help insurance companies thrive, read the Equinix ebook “6 Emerging Trends Faced by the Insurance Industry.”