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Insurance CIOs Are Reshaping Their IT Organizations to Fit the Times

A combination of economic, cultural and technological forces is making insurance CIOs rethink the configuration of their IT organizations.

As a health insurer, Cigna faces different market and regulatory challenges from those encountered by property/casualty and life and annuity carriers. But the way the Bloomfield, Conn., company is crafting solutions is largely shaped by the same forces affecting all industry segments. Insurers are forced to do more with less in a slow-growth market while coping with the effects of consumerization and advances in data analytics, cloud computing and core system technologies. As a result, insurance CIOs are forced to rethink the way they configure their IT organizations. Insurers of all types are reconsidering what critical capabilities they'll need -- from technology infrastructure to workforce skill sets -- and whether they should be within or outside the four walls of the insurance enterprise. Mark Boxer, CIO at Cigna ($29.1 billion in annual revenue), wants to be sure his organization isn't left behind.

"What got us into the dance isn't going to keep us there," observes Boxer. "The model is shifting dramatically."

The health insurance industry is moving from what Boxer characterizes as employer-centric sick care to a retail-centric, individual-customer-focused model that advances wellness and prevention.

"Much of the game is information management and analytics," Boxer says. "Creating a highly personalized environment that focuses as much on knowing the individual customer as on that customer's health and wellness requires IT leaders to be very good at creating a longitudinal view of the customer across multiple domains."

In the past the capabilities of a health insurance IT organization were centered on infrastructure and transactional processing, with a measure of information management in the context of traditional care and disease management programs, according to Boxer. Cigna's plan for industry leadership is based on a concept of health insurance plus services.

The company has repositioned itself as an individual-centric health services provider whose interactions with customers include health coaching, gamification, mobile computing, social media and Web-based incentives, all aimed at providing information and guidance to ameliorate customers' health risks, improve their health and lower their healthcare costs. That vision has profound implications for how IT is organized.

"Today you have to be able to manage outside your four walls, from an extended enterprise perspective," Boxer asserts. "If you look at what's happening with health exchanges, if you look at the need to integrate EHR [electronic health record] and EMR [electronic medical record] data, if you look at collecting information to create a customized and personalized experience -- those things are outside your four walls."

Traditional competencies still matter, but only as table stakes, Boxer stresses. "Even if you're better than the competition at providing service and managing your cost base, that's not going to differentiate you," he says.

Boxer counsels that the capabilities that will differentiate a health services company are information management, the ability to create an integrated framework for managing the extended enterprise and what he calls meeting the customers where they are. "That means engaging the customer through social media, gamification, instrumentation and device integration; the leveraging of big data to create personalized experiences; and obviously smart devices and mobile," he says. "That's what's going to be important."

Data management, customer engagement and a vision of the extended enterprise are key for all industry segments. However, senior management fluctuates with regard to what's considered core or suitable for outsourcing, says Al Parisian, CIO, Montana State Fund (more than $174 million in 2011 premium).

"For a while the business feels something is not a core function or [is] well served by being outsourced," Parisian says. "Five years later the pendulum swings. Now it's core, we're not happy it's outside and we feel we've given too much leverage to a vendor."

However sourcing fashions vary, depending on current leadership and what's happening in the market for a given line of business, the CIO's job is to maintain flexibility, Parisian maintains. Having data-centric technology architecture is critical for the purpose, making it easier to engage and disengage with capabilities and partners.

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

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