Insurance Tech Spending: Is This As Good As It Gets?
Manageable, tactical projects are in. Unfettered optimism is out. Cloud computing is in, but agreeing on a definition of it is out. Analytics are in. Legacy overhauls are out. Outsourcing is in, but no one wants to talk publicly about it. These were some of the themes that emerged at last month's ACORD LOMA Insurance Systems Forum. The mood at the event was subdued and cautious, but not hopeless.
"People are getting ready to get out of this crisis," observed Samuel Medina, director of insurance strategy and growth with Tata Consulting Services. The solution provider's Optimize IT program is geared toward "helping companies prepare for the upturn," he said. Other exhibitors confirmed that insurers -- especially P&C companies -- are continuing to make significant investments in technology. But the consensus is that carriers are taking longer to approve those investments and typically are approaching these initiatives in a more modular, contained fashion.
In response, many vendors have repackaged pieces of suites or larger systems as stand-alone offerings. For example, underwriting solutions vendor First Best launched First Best Agent, "breaking out the agent portal piece to stand on its own," reported CEO John Belizaire. "Carriers want to transform their underwriting processes, but some want to do it in stages," he said. "This gives them flexibility and faster ROI."
Meanwhile, at enterprise solutions provider SAP, "We're trying to offer more-modular and composite solutions, to give [companies] the ability to pick and choose what you want," reported insurance industry principal Hugh Anderson.
Where carriers are thinking enterprise deployments, it most likely has to do with data -- how to assemble and organize it, provide better access to it, and analyze it. While that always has been a priority in insurance, today's regulatory scrutiny and product development challenges mandate it. Accordingly, many vendors used the conference to promote their data management capabilities. According to IBM Global Insurance executive Rick Hoehne, "We want to help our customers ... treat information capital the same as you treat financial capital, with concepts like return on information equity."
Despite these encouraging trends, the proverbial elephant in the (exhibit) hall was the relatively weak carrier presence. Disappointment, however, was balanced by recognition that, along with a preference for quick-hit IT projects, this is an inevitable consequence of the financial crisis. But the unanswered question is: Is this as good as it gets?
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio
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