Given the current state of the economy and the checkered history of many IT projects, nobody is surprised to see that the technology party is over and the stern dictates of ROI now rule the day. What may be surprising to learn is that despite all that, financial services executivesand insurance executives in particularbelieve in the promise of technology more than ever and are willing, even enthusiastic, to invest in it. In fact, according to New York-based Tillinghast-Towers Perrin's first e-Track survey, significant numbers of insurance executives see technology bringing dramatic change to the industry.
In the study involving more than 100 North American companies, including a significant number of life and P&C insurers, a third of the mostly non-technology-oriented executivessuch as senior marketing and finance officerssurveyed noted no great impact from new technologies on the financial services industry over the past year. More than half of those polled think new technologies will bring "significant" change, and a third expect to see "revolutionary" change over the next three years.
While executives in the study said they see barriers to the implementation of technology, such as competing priorities and considerations of ROI, the economic downturn was cited by few. Despite the current climate, the survey indicates that insurance executives believe technology initiatives will be advanced by factors such as customer demand and good business results.
Such attitudes among insurance executives represent a revolution in themselves, according to Jenny Emery, global e-business leader, Tillinghast-Towers Perrin, and co-author of the e-Track study. The study's results also indicate that "they are beginning to recognize that the use of technology in their business is as much a core competency as underwriting, actuarial and marketing skills," she adds.
Emery says insurance executives realize that technology is not a "separate business," but rather a crucial tool in helping them to be better at their own business. The e-Track study showed consensus around three areas in which business leaders have learned that technology has changed the key business competencies affecting success, she notes: the needs to understand the customer, work in more effective business partnerships, and get innovative products to market. "These are pretty revolutionary things for insurance companies because they traditionally haven't done them very well," according to Emery.
E-Track finds that insurance companies will continue to increase their investment in new technologies, though focuses will vary by sector. Life insurance companies reportedly will focus efforts on enabling effective distribution channels and customer relationship management, Emery asserts, while the health insurance industry segment will look to cut administrative costs and "the challenge of managing the huge number of claims and other transactions," she says. Property and casualty insurers will see value in improving underwriting through technology, Emery forecasts.
Even though the first e-Track survey was conducted prior to he September 11 terrorist attacks, the results of the second installmentscheduled for release in January 2002 at press timeshow that "the vast majority of respondents haven't changed at all their plans for investment in technology subsequent to September 11," according to Emery.
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