While 2008 was a year that no company in the financial services industry would choose to repeat, property and casualty insurers fared better than their colleagues in other more volatile market segments.

But the p-c sector isn't exempt from the turmoil facing the broader financial markets and other insurance sectors. In fact, we are seeing visible changes–including a hardening of certain markets–and should anticipate new regulation as legislators seek to prevent future crises in the financial services industry.

To maintain profitability in the new economic and regulatory climate, p-c insurers are getting back to fundamentals, focusing on operational excellence–including solid rating and underwriting–to reduce risk and maintain rates in a volatile market.

Supporting these requirements means insurers will more closely scrutinize their business processes and associated enabling technologies.

In the year ahead, we can expect to see process automation continue as a priority in the p-c market as insurers reinvigorate their focus on operational efficiency and excellence.

Insurers will begin to expand their vision of process automation beyond “workflow around a document” and adopt, in earnest, a broader business process management (BPM) view of the entire policy lifecycle.

As technology continues to evolve, the market is becoming more comfortable with BPM and rules-based process control, which can yield improved efficiencies as well as new levels of customer care.

Consider the impact of automating the endorsement process.

A customer has a son who has just turned 18 and has phoned his insurer's call center to ask about the process for a rate change. The call center agent explains that an endorsement is required, and then initiates the process on the spot as part of the call. The customer and his agent know the outcome in just a few days.

Using BPM-assisted services, the insurer can integrate the call center with its policy administration and rating services, automating a process that previously required multiple calls and several independent processes.

Information technology integration also is continuing to escalate as a priority for p-c insurers.

First, it is essential to enabling BPM so that systems throughout the enterprise can communicate to ensure end-to-end automation and straight-through processing.

Just as important, many of today's insurers still use legacy systems that stymie their ability to innovate and adapt to changing market conditions.

Some carriers may have 30 or more such systems, often on different platforms and from multiple vendors. Many feel trapped by their legacy environment but are reluctant to part with these aging and disparate systems due to the potential for lost efficiencies.

To enable the process automation and operational excellence that today's dynamic market demands, p-c insurers must have strategic and executable integration strategies that can connect their many disparate systems and extend their investments, regardless of their platform (mainframe or server), while enabling the addition of best-of-breed applications.

When seeking greater agility and operational efficiency, many insurers are getting back to basics and taking aim at their core systems–including policy administration, rating and underwriting.

They are seeking open solutions that integrate easily with existing legacy systems while delivering new value. These solutions must provide best-of-breed functionally, facilitate streamlined deployment in existing architectures, and reduce time-to-market by leveraging pre-loaded industry content.

In a hardening market, p-c insurers will consider the effectiveness of their rating engine and how quickly it can facilitate rate changes. Insurers then need to streamline the regulatory approval process and swiftly distribute the new rates to agents, underwriters and brokers.

Single rating engine systems that provide pre-loaded content and templates are useful as a starting point for new rate creation.

Also, such systems empower business users with little or no IT intervention and promote faster speed-to-market compared to systems that require significant manual loading of rating information. Plus, they ensure accuracy and enable faster compliance with industry standards.

As the financial community as a whole is subject to greater regulatory scrutiny, p-c insurers–like their counterparts in other segments of the industry–are seeking greater transparency into their business operations and risk exposure.

As a result, insurers will seek expanded data management and analytic capabilities for business intelligence as well as comprehensive governance, risk and compliance (GRC) solutions.

In assessing needs, insurers may determine their reporting does not provide sufficient insight into emerging risk, instead providing only a rear-view mirror for past events. Today's insurers require powerful, yet user-friendly analytics that enable sophisticated trending as well as granular-level, drill-down capabilities that a business user or executive can access directly from the desktop, without reliance on IT for support.

Compliance issues loom on two fronts for insurers.

First, the industry as a whole can expect to see expanded government regulation as fallout from the recent financial crisis. In addition, insurers are taking a hard look at their own organizations and assessing their GRC procedures and vulnerabilities.

Compliance initiatives of both types require extensive data compilation and analysis–a process that, historically, has been labor intensive.

Insurers are increasingly seeking systems that will help them to automate and streamline increasingly complex compliance-related processes.

During the year ahead, we will likely see expanded interest in international markets as insurers seek to balance risk and cultivate new opportunities. Companies doing business internationally require IT infrastructures and systems that are flexible and adaptable to new geographic markets.

Adaptability will be a key across all enterprise systems from core applications, to enterprise resource planning suites, to customer relationship management, to GRC systems.

Templates and pre-loaded industry content also will be essential to enable rapid expansion into new geographic markets.

Efficiency, agility and transparency will guide the p-c market in the new economic landscape and form the cornerstone for continued success and growth.

These objectives will influence IT priorities in the coming year as insurers seek to harness the growing power of technology to help them maintain profitability and capitalize on emerging opportunities and markets in our new economy.

Special Reports /

Automation Will Be Critical Element As Insurers Seek More Agility In 2009

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