Placing one's bets in technology spending for P&C companies has always been a dodgy proposition. Reliable information can be hard to identify and extremely costly, and traditional consultant sources of research may have their own agendasoften at odds with those of carriers. As budgets have grown tighter, carriers are increasingly forced to look to alternative sources of the kind of information that can minimize their technology investment risk.
In an endeavor to provide alternative to "mile-wide, inch-deep" analysis and expensive client-specific research, Insurance Technology Group (ITG, Toronto) has launched a shared-cost research model that aims to provide the quality of client-specific research at perhaps a fifth of the cost, according to Marek Jakubik, managing director and founding partner. ITG's model is based on building a membership of P&C companies that will collaborate to identify topics of interest and will serve as the sole source of funding for research initiatives conducted by "captive" ITG analysts. The initiative was launched at this week's IASA 2003 Educational Conference & Business Show in Denver.
Jakubikwhose carrier experience includes having been CIO of Zurich's Canadian P&C operationssays that as a technology executive he characteristically found traditional sources of intelligence lacking in depth, relevance and objectivity. Additionally, he adds, "consulting is expensive for mid-sized companies: You spend $250,000 or you get nothing, and the alternative is very painful."
ITG plans to eventually form a consortium of about 40 member P&C companies, which will meet twice a year to identify research topics, which will in turn be studied and reported on in the intervening period. Between now and the end of the year, ITG aims to bring aboard a critical mass of about six subscribers. What the group will be able to achieve, Jakubik asserts, is to "address those few decision areas that are of paramount importance, and perhaps make-or-break" for the member companies.
Commenting on the ways in which consultancy-sponsored research may not completely satisfy insurers' market intelligence needs, Judy Johnson, vice president of insurance strategy, Sapiens Americas (and formerly part of META Group's insurance practice), comments, "there has never been any guarantee that significant research was going to be done around your specific issues, or in significant depth regarding the set of vendors that you need to understand. P&C companies have always had the same problem, but it's more acute now because one of the first things to get cut when budgets get slashed is research."
ITG faces a challenge in getting sufficient buy-in on the part of its prospective P&C company clients, but the model could prove uniquely valuable to companies seeking to avoid making costly mistakes, in Johnson's view. "A lot of companies are not getting access to the research companies, and even when they are, they can't necessarily give them what they need," she says. "They're getting a drip out of a faucet, and what they really need is a firehose."
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