While chief executive officers of property/casualty insurers have advanced in their understanding of the value of technology to the business in recent years, the results of a Novarica (New York) survey published in February suggest that some glaring gaps remain and that continuing education is in order.
Among the findings of the study, "Insurer CEO's on Technology: Property/Casualty," which surveyed about 60 CEOs from a broad cross section of the P&C industry, are that CEOs in general fail to appreciate the technological sophistication of customers, and that smaller company CEOs are often unfamiliar with new technology areas, such as service-oriented architecture and Web 2.0.
One of the lessons to be drawn from the survey's results is that "you shouldn't necessarily assume a level of sophistication in the executive suite," says Matthew Josefowicz, Novarica's insurance practice director and originator of the study. "I think one of things this means for CIOs is that they need to focus on communication and education as part of their core mission."
Areas where CEOs' technology-savvy is strong demonstrates the value of that communication, according to Josefowicz. "In the early 2000s, there were still companies without agent portal in place, and that's where the executive suite needed to be educated about the potential for agent e-business," he comments. "That conversation is pretty much over now, and CEOs by and large recognize the transformative power of the Internet on their interactions with distributors and customers."
The results of the survey suggested that companies are more likely to be better informed about the potential for technology to support the business when the CIO reports directly to the CEO, according to Josefowicz. "Part of that is a reflection of the type of CEO who thinks technology is important enough to have the CIO at the top table, and part of it is the feedback loop that results from the CIO's direct communication with the CEO," he observes.
In terms of industry segment, CEO's tend to be more tech-savvy in large personal lines carriers, for obvious reasons. "It goes with their focus on technology in support of communication," Josefowicz remarks. "Smaller commercial lines companies have fewer communications networks and fewer interactions to manage."
However, if commercial lines companies feel they can be complacent about CEO technology ignorance, they are mistaken, in Josefowicz's view. "Thinking about technology only in terms of communications capabilities may put commercial and specialty lines writers at risk of failing to use data effectively," he cautions. "They are missing the opportunity to capture and move more data electronically, which will make that data more accessible to better analytics, which in turn will be the key to better risk selection and profitability going forward."
Smaller companies in general are more likely to have less-tech-savvy CEOs, as demonstrated by the survey's findings that they are far more likely to be ignorant of key emerging technology areas. Because smaller companies have less complex legacy infrastructure to cope with, they have an opportunity to reverse the effects of that ignorance, but as with all P&C companies, education and communication will be essential. "CIOs in smaller firms need to educate their executives not just on the role of technology in their own companies' current state but on some basic technology trends and their potential impact," Josefowicz advises.
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