Business intelligence and analytics are essential tools in the insurance industry for combatting fraud, monitoring sales, and increasing profitability. Most insurance companies primarily utilize traditional databases for keeping track of information and reporting. These databases are tried and true, however, they are missing out on advances in technology that could affect their business in a meaningful way.
Columnar databases are the most current and efficient data solution, allowing for greater speed in processing and analytics. The more efficient a database is at processing reports and analysing data quickly, the more effectively it can aid a company in monitoring performance, catching fraud, and making the best business decisions.
A columnar database stores data on disk in columns rather than rows. This means that like data is stored sequentially on disk which can speed up read times for many types of analytic and reporting queries. It also means data on disk can be compressed to a greater degree.
5 major advantages of columnar databases:
The first advantage of switching to columnar databases is the increased processing speed. Columnar databases differ in the way they store and process data. When processing a report, instead of going through each row of data one by one, a columnar database picks out only the relevant columns to sort through which decreases the amount of time it takes to run a report, especially when working with large sets of data.
The database will look the same to the user, the difference is in how data is stored on the disks. When reading data by column, the process can scan much more relevant data at once. This method increases efficiency in the way certain reports and queries are processed, allowing them to be completed in a fraction of the time it would take when using a traditional database. This advantage is typically seen in analytic- and reporting- related queries.
It is important to note that the way data is organized within a columnar database allows them to read data much faster, however, this type of organization slows down the data input process. These would not be a good solution for transactional databases (OLTP), but if you are concerned with analytics and reporting (OLAP) databases, they are a great way to improve performance.
The storage of data in columns rather than rows makes these databases extremely scalable. Most columnar databases also store data across many nodes. This makes columnar databases a good option for companies which focus on growth or need a data solution that can be adaptable as the company’s needs evolve.
3. Protection of Data
To reach the needs of both the business and its customers, safety of data is essential. A loss of data could be detrimental to the company’s operations, reputation, and cause problems for policy holders.
Data storage within columnar databases is much safer because it is cloud-based and stored across multiple nodes. Having multiple copies of data within the cloud protects from loss, ensuring the security of your data.
4. Lowering Overall Costs
There are several ways columnar databases differ from relational databases that allow them to make better use of storage, which, in turn, saves money. Since data in a columnar database is stored on disk by columns instead of rows, like data is stored adjacently which allows for compression algorithms that can reduce the size of the data stored on disk.
Relational databases use additional storage to make backups of data regularly, but columnar databases use less space while keeping multiple copies of data by storing redundant copies of data in compressed formats. These multiple copies both increase the speed of reads from the system and reduce the risk of data loss.
In addition, the data can be stored in any desired sorting order, which eliminates the need for indexes to be created and the space those indices would require.
Columnar databases are no more expensive than other data solutions, and their efficient use of space helps save costs overall.
5. Easy to Implement
There are few barriers when it comes to adapting a columnar database for analytics and reporting (OLAP), and they are becoming more widely used which has led to a decrease in price over recent years. They are less expensive than other, less efficient solutions, making them affordable to implement.
The biggest barrier to entry would be replacing an existing OLAP system. With such an affordable cost, it is well worth considering when it comes time to modernize existing warehouses or data lakes. The speed and ease it provides to produce the intelligence that can be used to keep a business operating at its optimal level means there will be a positive return on investment.
In short, columnar databases offer several advantages that can optimize analytics performance, increase efficiency, and save money. NEOS has the insurance domain knowledge and technical resources to help insurance companies implement a data modernization effort that includes a solution such as this. As the use of columnar databases becomes more widespread, it could be a technology worth considering.