Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Compliance

10:42 AM
Connect Directly
RSS
E-Mail
50%
50%

Insurers Should Prepare for Change in Competitive Landscape

Despite increasing competition and a slumping economy, traditional insurance carriers are well-positioned to face challenges from other financial services companies, said Deb Smallwood, TowerGroup's practice leader for insurance.

Although insurance IT leaders are having to contend with business challenges that accompany a changing competitive landscape that includes financial services companies, traditional insurance carriers who have performed through wars and terrorism—according to Deb Smallwood, practice leader for Insurance, TowerGroup (Needham, MA)—are well-positioned for the challenge. Smallwood conveyed her thoughts at last week's TowerGroup's 2003 Financial Services Business and Technology Conference and Exposition in a session titled "Linking Technology, the Customer & the Bottom Line."

Smallwood's overview of the current state of the insurance industry pointed to the industry's successful use of a product and service-centric model with a wealth of rich customer data including details about family, income, assets, debt and health. "No other industry has the same breadth and depth of knowledge that insurers have," says Smallwood. Additionally, Smallwood related that insurance carriers have established distribution channels with extensive networks of direct sales, agents, brokers and partnership.

Despite these advantages, carriers must become aware to threats to their market share. Smallwood warns that although traditional carriers have weathered decades of market fluctuations, insurers "can no longer depend on high returns on reserves because they are not just competing with other insurers but other financial services companies as well."

In order to be players in the competitive insurance market, Smallwood relates that carriers have already begun searching for ways to do things better, faster and sometimes cheaper. P&C carriers, explains Smallwood, are focusing on strategies for expanding market share while containing costs, while life and annuities providers are focusing on strategies that will expand their wallet share while leveraging their strengths. Additionally, says Smallwood, IT spending is becoming more tactical as carriers aim for quicker releases of projects, with most insurers following the rule of leveraging existing resources first, then buying and building last.

In order to ensure operational efficiency in IT, Smallwood suggests that carriers utilize a four-part framework which focuses on leadership, strategy, development and personnel. The leadership section of this paradigm should hold responsibility for vision and communication, alignment and an IT scorecard. Additionally, Smallwood suggests that the strategy section of the model focus on strategic planning, methodologies and execution. Standards, project management and tools should be handled by the development group. And skills, teamwork and training should be the focus of the personnel section, according to Smallwood.

Register for Insurance & Technology Newsletters
Slideshows
Video