Regardless of platform, however, P&C insurers are demanding that their new core systems support Web functionality to provide customer support, agent/broker tools or additional channels of product distribution. ""The hot button for every single carrier is e-commerce,"" says Andersen's Hollander. ""You get two or three flavors. One are companies looking to improve efficiencies of their current systems by implementing e-procurement andchanging the way they buy goods and services. A second is looking for ways to reduce costs of servicing by providing direct access of information to agents, brokers and insureds. The third is Web-based selling. There are companies looking at whole new front endsWeb-based sales to complement their business models.""
Carriers in the P&C industry also need their administrative systems to at least communicate with the systems of information vendors and others on whom they rely for reporting, processing and underwriting. ""They need to be able to interface with these Web companies and third-party data providers, to get data from them and to themcompanies such as an InsWeb, Quotesmith, Priceline,"" says CGI's Stagno. ""If I've got archaic systems that can't acceptas a rudimentary examplean ACORD AL3 record, and I can't even distribute my rates in a fashion that anyone can use, I'm going to have a problem going forward.""
Administrative systems vendors also are incorporating Internet technologies to improve software functionality and reduce costs. ""The tactical change we're seeing is the cost-of-ownership issue,"" says Mynd's August. ""By running code centrally on a server through browsers, and not having to run a client/server environment, it can reduce the cost of ownership by reducing the code maintenance issue. That really changes the whole system support equation for an insurance company.""
Not only has the Web influenced what capabilities insurers expect their administrative systems to have, it has also significantly compacted the time in which insurers expect these systems to be developed.
""Companies are looking to get incredible results in a few months,"" says Walsh. ""If you can deliver something in three months, your stock goes up. It's hard for a CEO to ask the board and the stockholders to hang on for two years.""
This translates into additional pressure for technology vendors. Also, vendors need to deal with an ever-changing insurance marketplace marked by not only mergers and acquisitions, but by an increasing number of cooperative venturesranging from partnerships to outright mergers.
""Strategic ventures have been the biggest shift in the past 12 months,"" says Andersen's Hollander. ""Virtually every insurer is looking at at least five to 20 deals to participate in. They can offer not only financial upside but also tools to use in their business.""
Of course, consolidation hasn't only occurred among P&C companies; there has been notable retrenchment on the vendor side as well (most notably in 2000 the pending merger between CSC and Mynd; see related article, page 61). But perhaps more significant for most vendors is a growth in their own strategic alliances, fueled by the aforementioned best-of-breed system strategy by insurers.
""From my personal involvement in alliances, I can probably say it's 100 times what we used to do,"" says Stagno of CGI, which has confirmed alliances with Siebel Systems (San Mateo, CA) and Microsoft (Redmond, VA) and expanded relationships with Oracle (Redwood Shores, CA) and Sun Microsystems (Palo Alto, CA) over the past 12 months. ""That goes along with the best-of-breed conceptour aligning with companies who can add a lot more value to a client than us going in alone.""
PROPERTY & CASUALTY SYSTEMS:KEY TRENDS AND CHALLENGES
- Post-Y2K investments in new systems.
- Emergence of best-of-breed concept, integrating offerings from specialty vendors for a comprehensive solution.
- Legacy systems cannot support e-commerce initiatives.
- Interoperability is key.
- Insurers expect much faster product and application development.
- Growing number of cooperative ventures, partnerships and mergers.
- Emergence of virtual insurers and new competitors spurs demand for complete systems.
P & C Systems
P&C SYSTEMS: SOLUTIONS PROVIDERS
AGO Insurance Software, Mt. Arlington, NJ
Allenbrook, Inc., Lowell, MA
AQS, Hartland, WI
CGI, Andover, MA
Cover-All Technologies, Fair Lawn, NJ
CSC, El Segundo, CA
Fiserv/SIS, Orange, CA
The Freedom Group, Cedar Rapids, OH
Insurance Data Processing, Wyncote, PA
INSpire Insurance Solutions, Ft. Worth
INSTEC, Naperville, IL
ISO, New York
Mynd, Columbia, SC
PDA Software Services, Overland Park, KS
Pyramid, Danbury, CT
Rebus Systems, Secaucus, NJ
Sherwood International, London
Systems Task Group International, New York