Dramatically cutting IT spending and waiting for the crises to pass may not be the right approach to deal with the current financial situation. Instead, a strategic approach of investing in IT for a competitive edge could reap better results. According to insurance analyst Matthew Josefowicz, “carriers should be making those long needed reforms in their operating strategies and technology capabilities”. Increasing demands coming from both consumers and distributors are going to enable those who make advances to get noticed – and that’s a surefire way to regain control of the bottom-line.
In a recent survey conducted by Celent among CIOs of various insurance carriers, growth in the business, cost reduction and distribution dominate the insurance IT concerns for 2009. This article in Insurance networking news, covering Celent’s annual roundtable, encapsulates the path CIOs are prepared to take to herald their dominance in their respective segments. They all look towards IT to resolve their issues.
It’s heartening to note that the panel attending the roundtable echoes similar sentiments on the role IT can play in the insurance industry. The thoughts expressed during the roundtable on “Managing IT in times of crisis” welcomes the positive impact of technology on business processes.
Offering an upbeat assessment and action plan, Andy Edwardson, VP, Information Technology for Farmers Alliance, and winner of Celent’s 2009 Model Carrier award, told the audience that it’s during tough times that the business turns to IT for help with business objectives. “It’s a time when IT can really shine.”
It’s true that companies can efficiently leverage processes through a proper implementation of the right IT product. The workforce can be kept on business critical activities that impact revenue generation as IT takes control of the redundant activities and minimizes time frames improving accuracy drastically.
Paul Vancheri, SVP and CIO of Boston-based Fidelity Investments Life Insurance Co., a provider of investment and retirement products opines, “The sales groups are under pressure because they have to deliver more with less. This means more investment in IT.”
Economically tough times bring heightened competition to win business opportunities, and producers are being tapped to improve performance. They are the backbone of a successful insurance company. They help in improving market share and ensuring revenue generation to keep the company machinery running. Companies that support their agent force with ideal technology tools guarantee an active improvement in their performance. Additionally, calculating their commissions through a keen Incentive Compensation Management system takes the momentum of the sales teams to the next level.
From his perspective, offered Benjamin Roberts, CIO, Commercial Lines, Middle Market & Specialty at The Hartford P&C, “With our specialty lines it’s about streamlining business within the channel. So we need to be more thoughtful about what our producers need. And, we are using technology to become much more scientific as to segments we target.”
With the advent of innovative products in the market, it is imperative for carriers to take the cutting edge route to attract customer interest. What better resource than IT to support scientific approaches to understand the market trends and customer needs?
A sign that the economic climate cannot put a damper on IT spending was the level of IT spending by Conseco Services LLC. Emerging from bankruptcy, the company still intends to spend on IT. Though they plan to spend 40% less in 2009 than 2004, they are only spending 8% less in 2008 than in 2007. So, although the company has undergone some tough times, their IT spending is not continuing to drastically decline.
Russ Bostick, EVP, Technology and Operations at Conseco Services LLC, an Indianapolis provider of financial services products to the consumer middle market, reported that his company may be the exception (having emerged from bankruptcy), spending 40% less in IT in 2008-2009 than in 2004. “However we will spend only 8% less in 2008 vs. 2007. Our more radical spend changes really reflect where our company has been and where it’s going.”
The above opinion reiterates the faith that insurance industry is placing in IT to help them through economically tough times. This attitude towards IT spending is beneficial to struggling companies and performing companies alike. Trusting in innovative technology investments to carry insurance companies through the downturn and into the future is forward-looking and a wise bet.