What Is Data Migration In Insurance?

Janusz Januszkiewicz
December 12, 2023

38% of data migration projects fail. Gartner reported that in 2022, over half of data initiatives were expected to exceed their allocated budget and timeframe, potentially causing damage to businesses, due to inadequacies in strategy and implementation

Imagine your company working perfectly one day, to stop working entirely the very next day because of a failed data migration project. Scary, right?

In this article, we're covering the importance of data migration, its effect on business, risks and challenges involved, and how to handle them.

What is an insurance data migration and why you should consider it?

Technology evolves. So should your company.

91.9% of organizations achieved measurable value from data and analytics investments in 2023. With more and more new solutions coming out regularly and the recent boom in the AI niche, you need to keep up.

The importance of data migration in insurance cannot be understated. It enables insurance companies to leverage new technologies, improve data analytics and reporting capabilities, and ensure that their systems remain scalable, secure, and compliant with industry standards and regulations.

What are the types of data migration?

In the insurance industry, data migration is a critical process that can be categorized into several distinct types, each addressing specific needs and challenges.

  • Storage Migration - This type involves moving data from one physical storage unit to another. For insurance companies, this might mean transferring customer records or policy information from outdated storage systems to modern, efficient ones. This transition is essential for improving data retrieval speeds and enhancing overall data security.
  • Database Migration - Database migration in insurance refers to the transfer of data between different database systems or formats. This might involve moving data from legacy systems to a more advanced one target system, like from an SQL-based system to a NoSQL database. This type is crucial for insurance businesses looking to leverage more robust data processing and analytics capabilities.
  • Application Migration - This type involves moving data from one application to another. In insurance, this could mean transferring data from an old policy management system to a new, more feature-rich platform. Application migration is vital for integrating advanced functionalities like automated claim processing, customer relationship management, and risk assessment.
  • Business Process Migration - This encompasses the transfer of data associated with specific business processes. For insurance companies, it could involve migrating data related to underwriting processes, claims management, business rules, or customer service operations. This type of migration is often part of a broader business process reengineering aimed at improving efficiency, reducing costs, and enhancing customer service.
  • Cloud Migration - Increasingly important, cloud migration involves moving data, applications, or other business elements to a cloud computing environment. For insurance companies, this can offer benefits such as scalable storage, improved data accessibility, enhanced security, and cost efficiency.

How a picture-perfect insurance data migration should look like?

Stages of data migration

What's crucial for a big insurance company during data migrations, is:

  • Strategy and Planning - This involves a thorough analysis of the current data systems and understanding the technical and business objectives of the migration. The plan should identify the data to be migrated, the methodology, and the timeline. It's crucial to involve stakeholders from different departments to ensure all perspectives are considered.
  • Technical Expertise - The migration team should include IT professionals with expertise in data migration, cybersecurity, and the specific technologies being used. It's beneficial to have team members who understand the unique data needs of the insurance industry.
  • Effective Data Management - Data must be audited for quality and consistency before migration. This includes cleaning up redundant or obsolete data, ensuring data accuracy, and standardizing formats.
  • Advanced Technology and Tools - Selecting the right migration tools is critical. This could include ETL (Extract, Transform, Load) tools, cloud-based solutions, and data integration platforms that support the specific data types and volume of the insurance company.
  • Data Security and Compliance - Developing a security plan to protect data during the transfer, including encryption and secure data channels. Compliance with industry regulations like GDPR or HIPAA is also crucial.
  • Stakeholder Communication and Engagement - Regular updates and meetings with stakeholders to discuss the progress, address concerns, and make adjustments as necessary.
  • Risk Management and Contingency Planning - Identifying potential risks such as data loss, system downtime, or security breaches and establishing procedures to mitigate these risks.
  • Training and Support - Designing a training program for end-users and IT staff to familiarize them with the new system and providing ongoing support to address any issues post-migration.
  • Testing and Validation - Conducting thorough testing of the data in the new system to ensure integrity and functionality. This should include tests for data accuracy, performance, and usability.
  • Post-migration Review and Optimization - After the migration, a review to assess the success of the project, including an analysis of whether business objectives were met and identifying areas for future improvements.

Data security during migration

Data security in the data migration process is paramount, especially in sectors handling sensitive customer data like insurance. The process involves several risks and challenges, as well as critical steps to ensure data integrity and security.

  • Data Breach Risk - During migration, data is vulnerable to unauthorized access or theft. This risk is heightened if the migration involves cloud-based storage or third-party services.
  • Data Loss - There's a risk of losing data during the transfer, especially if the data is not properly backed up or if there are compatibility issues between old and new systems.
  • Data Corruption - Inaccurate or incomplete data transfer can lead to corrupted data, affecting business operations and decision-making.
  • Compliance Violations - Failure to comply with data protection regulations (like GDPR or HIPAA) during migration can lead to legal and financial repercussions.

When you should decide on an insurance data migration process?

According to a Deloitte survey of 29 Chief Data Officers, enhancing data and analytics usage is a primary objective.

  • 68% of these CDOs aim to improve their use of data and analytics.
  • 61% consider executing their data strategy as one of their top three priorities.
  • 50% seek to enhance the data culture within their organizations.

An insurance company should consider data migration when:

  • They need to update or replace outdated systems with more efficient, modern technology.
  • They are integrating data following a merger or acquisition.
  • There's a need to enhance data security and compliance with new regulations.
  • They want to improve data accessibility and analysis capabilities for better decision-making.
  • There is a significant increase in data volume that current systems cannot handle efficiently.

By our experience, the majority of failures during migrations happens due to the fact, that the decision came too late. There was not enough time for planning and execution. With rush – mistakes happen.

So if you're considering data migration, decide sooner and start the process earlier. Give your company time necessary to deliver. If you're not sure, order a consultation from a company experience in vast data migrations.

Why is it better to outsource insurance data migration?

Outsourcing data migration in the insurance sector is crucial due to the specialized expertise required for such complex operations. As highlighted by the client's response, while large insurance companies may possess the necessary infrastructure, they often lack the specific competencies and experience in data migration. This process is not a frequent task within the industry, and finding professionals with real-world experience in this area is challenging

Companies like Decerto, with multiple successful migrations under their belt, offer a blend of technical knowledge, insurance-specific IT insights, and practical migration experience. This combination is rare and difficult to replicate in-house. Data migration in insurance is particularly challenging due to issues like incomplete or inconsistent data. 

Read more about Data Migration Solution

Every policy, representing an individual client, must be accurately transferred to the new system, regardless of its complexity. Without a developed methodology and specialized tools, the process can be prolonged and may not achieve complete success. Therefore, outsourcing to experienced firms ensures efficiency, accuracy, and compliance in this critical operation.

Outsourcing insurance data migration is more effective

Outsourcing insurance data migration is advantageous, primarily due to the specialized expertise that external firms offer. These companies bring in-depth knowledge and experience in handling complex data migrations, ensuring efficiency and success. 

This arrangement allows insurance companies to maintain their focus on core business activities, rather than allocating significant internal resources to the challenging task of data migration. 

Additionally, outsourcing provides a layer of risk mitigation, particularly in managing data security and regulatory compliance challenges. 

From a financial perspective, it can be more cost-effective than building an in-house team, especially for projects that are infrequent or one-off. 

Outsourced firms also have access to the latest migration tools and technologies, offering advanced solutions that may not be readily available in-house. 

Furthermore, these firms can offer scalability and flexibility in their services, adjusting their resources to meet the specific needs and scale of the migration project.

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