The atmosphere of the ISOTech conference in Las Vegas earlier this week was in many respects reassuring. The general sessions were good, the breakout session topics were spot-on, and the vibe was optimistic. There was some vendor grousing about attendance, but some degree of drop in numbers is to be expected in these troubled times. Finally, everybody I spoke to was sanguine about technology spending. A prominent analyst told me that his predictions for spending had gone from slightly pessimistic to slightly optimistic in the light of carrier feedback. These impressions reinforced those of I&T's Executive Summit, held the week before in Phoenix, and perhaps a little more robustly attended...And yet, there is a hollow feeling about the industry's optimism. We are confident that insurers' need to invest in technology will trump the cost-consciousness that otherwise would dominate a lean period. But the question is how lean and how long this period might be.
In the light of recent events, it's easy to forget that the subprime crisis has been haunting the financial services industry, and the economy as a whole, for more than a year now. Since last fall we have been wondering how bad it might get. We seemed to get an answer when the extent of necrotic debt began to reveal itself earlier this year and financial titans began falling like dominoes. But have we had our answer, or is this a second prelude to even deeper distress?
Surely the current mood has a certain unreality or Potemkin quality. Behind the optimism lurks dread that our conditioned expectations and willingness to be cheered up mislead us. At the Executive Summit, we cheered the arrival of a new president whose personal background alone suggested a more generous day had arrived, and whose message was one of hope and change. Of course hope, a buck and about .89 in change will get you a regular coffee at Starbucks, and our president elect will face challenges of historic proportions, if only in terms of the financial crisis.
We could have made that prediction during the first few weeks of the crisis when we reported on the sensational news that arrived day by day. It seemed then that we'd face a brief bloodbath, followed by a long climb upward. The mood was reminiscent of a book I've been reading that described the mood in Paris in 1914. We know how those expectations worked out. British Chancellor of the Exchequer Alasdair Darling predicts a short, sharp recession. At this point, that seems as plausible as "peace in our time," as the news breeds a mood more like that of the Phony War period when bad news foreshadowed worse.
As we reach the middle of November, the bad news continues at a remorseless pace. The markets, which showed some signs of recovery prior to the election, continue to plunge. American Express is seeking a bailout now, and the contagion is spread from financial services to the automotive industry, with commercial aviation threatening to seek government aid next. Even as the government continues to infuse industry with cash, Treasury Secretary Paulson has veered from his plan to buy banks' toxic assets and is moving Treasury's focus toward direct aid to consumers.
At least in the middle of all this gloom, some hoary institutions are demonstrating the strengths on which their reputations were built. In the United States, major insurers are vaunting their financial health and saying "no thanks" to federal offers of financial relief. And in the Gulf of Aden the Royal Navy is teaching Somali pirates who really rules the waves.The atmosphere of the ISOTech conference in Las Vegas earlier this week was in many respects reassuring. The general sessions were good, the breakout session topics were spot-on, and the vibe was optimistic. There was some vendor grousing about attendance, but some degree of drop in numbers is to be expected in these troubled times. Finally, everybody I spoke to was sanguine about technology spending.
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