Before we begin, we must warn you this installment of "CIOChronicles" will depart from the issues we've traditionallyaddressed in this space for the past three years. Our original ideawas for all of us to take a break for a change from the "here andnow" and amuse ourselves by glancing beyond the immediate horizon.But the moment one gives anything close attention, it becomes aworld in itself.

The "real world" in which we live consists of aging policy andclaims processing systems, fragmented customer information files,outdated architectures, hard-coded business rules, and thecountless processes and details of running and sustaining aninsurance business. It does, indeed, appear mysterious at times. Itcan be awesome. But only a few might call it magnificent. Why isthat?

The insurance industry should be a pearl farm of information andknowledge--a place where technology thrives. But most peopleinvolved in or responsible for insurance-processing infrastructuresare more likely to think of the environment as a milieu of littlelight and many shadows. Why is that? And what change for the betterdoes the technology-influenced future hold in store for theinsurance industry?

With that question repeating in our minds--and anticipating theresonance of those same questions through the sessions slated forthe spring/summer conference season--we ploughed through therelated reports, articles, and white papers that had reason tosurvive on our desks over the past six months. Our goal was toattend as many sessions as we could that promised to provide atleast a hint of an outlook into the future. And our hope was totalk to as many people as we possibly could trap into suchdiscussions. But as quickly as we wove our web, we became tangledin it. As we launched ourselves eagerly into trade show afterconference after panel, we had two simultaneous revelations.

1. Those who unreservedly contemplate and sometimes predict thetechnological future of the insurance industry don't work in it.Why is that?

There are a number of reasons:

o Those who work in insurance don't have the time or theperspective to ruminate on the future. They're generally busy beingchewed up by the present.

o Those who don't work in insurance have the time toponder--attach probability and package prognostication as aproduct.

o Those who work in insurance are consumed by things such astime and cost, profit and loss, expenses and adjustments,investment and return, retentions and ratios.

o Those who don't work in insurance have the time to compilestuff--demographics and socioeconomics, spending trends and buyinghabits, forecasts, figures, and foreboding.

o Those who work in insurance have to worry about keeping theirjobs by selling policies and service.

o Those who don't work in insurance have to worry about keepingtheir jobs by selling information to those who have to worry aboutkeeping their jobs by selling policies and service.

2. Much of what is being said has been said before--many times.If you're trying to reinforce a point, repetition is a good thing.But the point is there doesn't seem to be a point. We've beenhearing for years:

o Insurers are so conservative and inert they refuse to takenotice of the changing world around them.

o Technology has overtaken completely our ability to comprehendhow it will change the way insurance will be offered, bought, andsold.

o IT spending is up (or down).

o The bulk of the money will be spent on policy systems (orclaims systems).

o The number of vendors in the market will expand (or beconsolidated).

o Insurers will be undertaking incremental replacements with"best-of-breed" (or "best-in-class") applications (or completelyreplacing entire systems with "end-to-end solutions").

o The sky is falling.

And all of the predictions are delivered with the same senses ofdread and foreboding. Why is that? At the peak of the dot.com boom(if the prevailing wisdom were to be believed), everybricks-and-mortar business was about to be forced into oblivion ifit dared not transition to e-everything. We recall a magazine ad inwhich a concert piano, breaking free from the hoist, is plungingtoward the head of an insurer who wasn't "smart enough" to be onthe move toward a blissfully productive future on the Web. Infairness, none of us knew what we didn't know at that time. But thedot.com boom at least earned its foreboding--and then lived up toit. Today's rhetoric may be somewhat less ominous, but the messageessentially is the same. Do something--anything--or you're doomed.But the insurance industry doesn't have to save itself fromanything. It's doing quite nicely, thank you. It's just trying tounderstand its technology options and make a living. And all itgets is stale Chicken Little rhetoric. Why is that?

The dark truth is a match between the insurance industry and itstechnology services and information providers--vendors, advisors,analysts, and the trade media--has not yet been made. Unlike otherindustries--especially other financial services verticals in whichthe relationships between businesses and service and informationproviders have achieved mutual understanding, trust, andcollaboration, resulting in a higher quality of value exchange--theinsurance industry and its service and information providers seemto be operating in separate, mysterious worlds. Those worldsoccasionally come close enough for a spark to bridge the void.

For their part, information providers seem to be talking atinsurers from distant ivory towers. Offering little primaryresearch, insight, and virtually no business-specific analysis orguidance, they seem to have assumed the role of handsomely paidobservers. Collect some anecdotal evidence, repackage somesecondary or tertiary research, observe a trend, and you have theempirical equivalent of an astronomer with cataracts gazing throughhis telescope on a cloudy night. There may be some discernibleappearances and the occasionally glimpsed phenomenon, but thepicture is dim, fuzzy, and unreliable.

For its part, the insurance industry seems so starved forinformation--or so desperate not to misstep--that it continues tobelieve its competitive salvation lies in "IT innovation." In hopeof that salvation, it prays to the crepuscular astronomers who arepaid to put annuity before acuity. Consequently, convinced of itsresponsibility for IT, worried about its livelihood, and not at allaware it doesn't need to know what it doesn't know, the insuranceindustry remains dutifully queued before the observatory, ratherthan engaging in a meaningful communication of its business andprocess needs with IT vendors. The result is IT vendors spendmillions of dollars developing and improving products to meet needsthat haven't been clearly defined and they don't (and can't) fullyunderstand. Jumping into the vicious circle, IT vendors then feedthat product and process information to the information providers,which package the opinions and sell them back to the insuranceindustry. Bad information informs good causes. And on and on itgoes. Why is that?

The answer is self-evident: While IT spending in the insuranceindustry at its worst may stagnate, it surely isn't going down. Butthat doesn't mean the vendor community is getting fat. It means theinsurance industry still spends the bulk of its IT budget oninternal development. So, because IT is not the insuranceindustry's core competency (really?), the industry's IT investmentyields no meaningful return. Rather, good money is following bad toan extent that threatens self-defeat. And rather than helping ITvendors improve product, price, process, and performance, theinsurance industry resorts to outsourcing development in an attemptto lower expenses. Most surprising of all, there is no hue and cryfor a better way.

This approach is especially detrimental to midtier carriers.Some Tier 1 carriers may be able to trade on IT as a competitiveadvantage--or prolong the spending fight long enough to win a warof attrition. But midtier, regional insurers have to be servicebusinesses before they can be product or IT businesses. They haveto be the familiar, neighborly faces on which we can call when thecommodity giants pull out of a market--or get too big to know us,let alone talk to us. They simply can't afford the financialmisstep that will preclude them from supporting the serviceinfrastructure on which their relationship-based businesses depend.What's to be done?

In science, anomalies cause disruptions and change the course ofinquiry. In our science, the needs of the insurance industry remainthe same--relevant, objective intelligence that will help theindustry to do business in more effective and less expensive waysthat don't distract its energies or resources away from its corecompetencies and primary purposes. The messages from theinformation providers remain the same--insurers are conservative,IT spending is up and down, policy and claims systems vie forpopularity, the vendor community shrinks and expands, insurersfavor "best-of-breed" or "end-to-end," and the sky is falling. Theresponses of vendors remain the same--try to find a home betweenthe ill-defined needs of insurers and the informational leftoversof the information providers. It's time for an anomaly. We'lleither create it by choice or follow it out of necessity. But it'sinevitable.

The industry's ROI can be enabled only by impartial, insightfulinformation that can be acted upon--not by repackaged, obsoleteinference. The industry's ability to sustain itself can be ensuredonly if it demands such information in the form of primaryresearch, undertaken in response to specific requests, and pricedin a way that doesn't make it less costly to develop than todiscover.

In the light of day, the most obvious truths may be the hardestto find. Why is that?