Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


08:34 AM
Connect Directly

Small Comfort in Argentine Crisis

Technology offers limited benefits amid financial chaos.

No amount of technological sophistication could completely insulate insurers from the devastating Argentine financial crisis that came to a head late last year, but some executives claim IT conferred some important advantages on technologically well-equipped companies.

Most Argentine operations run on very open Unix-based systems, allowing greater flexibility within a volatile environment than might otherwise be the case, according to Alex Pineda, director of River Plate, Royal & SunAlliance's (Charlotte, NC, $899 million in written premium) combined Argentina/Uruguay operation. Nevertheless, he adds, "few companies have the technology to constantly model the effects of the currency's volatility and correct very fast."

While acknowledging that the fundamental problem is of a financial nature, "those without the tools to properly control budgeting, forecasting and modeling cannot serve customers in an appropriate way," says Pineda. "With the degree of volatility we've gone through, liabilities are extremely hard to measure, and client bases are totally exposed." Also, those who had already invested in technology will retain a significant benefit vis a vis their competitors, Pineda contends. "Those who have not will find it extremely difficult now."

Having a fairly sophisticated IT system "allowed us to get real-time information about policies, exposures, places, risks, currencies, due dates, payment systems, etc.," says Herman Weiss, Chubb's (Warren, NJ, $25 billion in assets) Argentine country manager. "With this information we were able to make what we believe were better decisions to face the crisis more rapidly and with better documentation than most of our competitors."

Tech Can Help

Given that the crisis involves losses in the hundreds of millions of dollars, the value of technology-based efficiencies will be limited, says Carina Lopez Espina, associate director, financial services unit, Standard & Poor's (New York). She acknowledges, however, that "given that the foreign exchange is escalating rapidly, and the fact that the premiums will be mostly peso-denominated, at least for a while, it will definitely make it much more expensive to invest in IT."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

Register for Insurance & Technology Newsletters