Boston-based researcher Celent said insurer information technology spending for data mastery projects is expected to stay the same, if not increase in the coming year.

That finding came in a new report that provides an overview of the structures, technologies and uses of data mastery within the insurance industry, as well as some best practices and guidelines.

The study, “Insurance Data Mastery Strategies,” notes that while the focus of data mastery investment may change to reflect an altered market, the percentage of IT budget spent on data mastery projects should not drop and may rise.

Celent said it uses the term “data mastery” to refer to accessing and using data, whether to empower knowledge workers (operational data mastery) or business strategists (analytic data mastery), rather than focus on the particular technology solution used.

The researcher noted that its recent insurance chief information officer/chief technology officer survey showed that data mastery initiatives are in progress or are a high priority at a large number of firms.

“Data mastery has been toward the top of the list for several years in a row, despite the changing nature of business priorities associated with the soft market,” said Celent. “Insurers have recognized the importance of data mastery, whether in good times or lean, because understanding data can help analyze new markets to enter or help cut back on spending and inefficiencies.

“With the current economic crisis a focus of all insurance planning, data mastery remains a top priority,” Celent added. “Being able to get better intelligence from corporate data will be crucial to reducing costs, determining areas for automation, and helping to survive in an environment where regulation is more important than ever.”

Data mastery projects in the insurance industry primarily involve seven areas: customer data (including interaction history), sales and marketing initiatives, claims analysis, fraud detection, finance and operations, profitability, and actuarial, said Celent.

“In a time when insurers will be carefully watching every IT dollar, investment in data mastery solutions will stand out as an opportunity for both short-term gains and long-term strategy,” said Jeff Goldberg, senior analyst with Celent's insurance group and author of the report. “Good data mastery will help a company find areas for increased efficiency and cost reductions.”

This report is published along with a companion report, “Insurance Data Mastery Solution Spectrum.”

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