IASA News: Process Trumps Technology

Insurance companies' need to focus on core processes and the value of data is shaping the future of technology in insurance, according to industry experts speaking at the Insurance Technology Trends roundtable at the 2005 IASA annual educational conference and business show in Anaheim, Calif. on Tuesday.

"Technology is not the only answer anymore," asserted Kimberly Harris-Ferrante, vice president and research director, Gartner (Stamford, Conn.). "We see a lot of companies that combine technology with data and apply it to process reengineering concepts," Harris observed, explaining that insurers are preoccupied with how to integrate siloed systems and convert plain data into valuable information.

"I've noticed a shift towards data as a byproduct of process," said panelist Chuck Johnston, director of compensation management, Siebel Systems (San Mateo, Calif.), who explained that the last seven or eight years have seen money shift from core process to data warehouse projects, and that the emerging trend is not to get data into a warehouse, but to get clean data out of core operational systems and make it immediately available. "If core systems don't have good clean data and processes, then companies spend so much time trying to scrub down data into valuable information that it becomes useless," continued Johnston.

The rapid adoption of data standards can enable such a shift, according to Chad Hersh, senior analyst with Celent's (Boston, Mass.) insurance practice. Hersh characterized standards as a driver towards the use of complimentary components to create efficient systems that can provide better services. "ACORD XML has taken off and it is a decent way to connect external systems," said Hersh. "We now have more choices and tighter integration, so the next step is figuring out what we need to do with our systems."

Compacting that need is the rising mandate for increasingly fast compliance, which, according to panelist Judy Johnson, principal solutions architect at India-based Patni Computer Systems, is having a side effect on vendors that had traditionally been concentrating largely on doing things faster. "Simply going faster can make some bad things happen faster, and, now, with Spitzer and SOX as top-of-mind themes, vendors are finding ways to repurpose or find new partnerships and new pieces of technology to help manage these compliance issues," Johnson remarked. "In the past, technology converged and new applications were formed, while now the need for new applications is leading technology convergence."

But even with the progress made on data standards and application development, the underlying problem in the industry, according to the Gartner analyst, is process. "It's hard to even agree on what processes look like at an insurance company," Harris-Ferrante said. "I don't think we're being completely honest because we don't even have metrics to measure processes."

Patni's Johnson supported the notion and called for process reevaluation saying, "There is a delusion that one system is markedly superior and also that our sets of systems are competitive differentiators, but no matter what, a system is still performing a commodity [function]." Hersh took the message a step further by commenting, "Saying something is a differentiator probably means we don't want to change it."