Market cycle, terrorism and the retention of quality IT professionals are currently the issues with the greatest impact on IT within global property and casualty carriers, says David J. Saul, executive vice president and chief information officer, Zurich North America (Schaumburg, IL).
"The first issue for P&C carriers to deal with is the market cycle," says Saul, who predicts that even though companies currently are experiencing a hard market, they will have to contend with a soft market within the next 24 months. "If you haven't engineered a way to survive in a soft market, you will experience the same fate as many other carriers: extinction," he warns. Saul believes that IT's reaction to market cycles is crucial to a carrier's success, because "technology is an integral part of the business model. If it is not, you will not only not experience growth in the marketplace, but in time you will cease to exist."
However, the management of IT budgets and resources during a soft market cycle will require some balancing, as global P&C carriers react to the issue that, in Saul's opinion, will have the second greatest impact on IT: terrorism and the consequences of 9/11. "Companies are now thinking about security needs," he says. "There is legislation that has just been passed that will translate into much more of a focus on IT areas such as disaster recovery, security, testing and planning. Therefore, there must be much more investment."
The ability of a P&C carrier's IT organization to juggle these concerns will hinge upon the quality of its staff, Saul emphasizes. Just as he believes that technology is an integral part of the business, strong IT talent, he says, ultimately provides business value. "Retention of quality IT insurance people is what allows the creative ideas to appear that, in the end, provide the business value that IT should be judged on," the executive observes.
More of Saul's insights into IT strategies for the global P&C industry will appear in the February 2003 issue of Insurance & Technology, and will also be available at www.insurancetech.com.