Insurers may be turning the corner in this struggling economy aswe enter the second half of the year, one of the industry's toptechnology analysts says.

"What we see in the results of our second quarter study is theconsensus seems to be the worst is over," according to Craig Weber,senior vice president for the insurance practice with Celent.

Indeed, there is a good deal of evidence emerging the recessionmay be behind insurers, and some of the market performance issuesare definitely turning in the right direction, he observed.

"How fast we get back, if ever, to the kinds of performance wesaw three or four years ago is not exactly clear, but I think wehave basically turned the corner," according to Mr. Weber.

He was one of three industry analysts taking part in a webinarlast week on "State of the Market: Where We Are, Where We'reGoing," run by Tech Decisions--part of Summit BusinessMedia's Property and Casualty Magazine Group, which includesNational Underwriter.

"In terms of how that affects technology and other types ofproject work with insurers, we believe things are definitely movingagain. People are looking for [technology] solutions," said Mr.Weber.

When asked by panel moderator Sharon Schwartzman, editor inchief of Tech Decisions, about what insurers need to beconcerned with in terms of customer-facing technology such associal networking, Matt Josefowicz, director of the insurancepractice at Novarica, issued a warning to insurers.

"There's a little bit of a danger of insurers approaching Web2.0 the way they approached Web 1.0," he said. "There was anincredible amount of hype [around Web 1.0], and companies wastedmoney on things that were not strategic. A number of othercompanies hid their heads in the sand."

As the Internet took center stage, particularly in therelationship between distributors and carriers, the companies thatavoided any significant Web initiative missed out on the valuebeing created by the Internet, according to Mr. Josefowicz.

"We think companies should pay attention to the impact of socialnetworking and think about it in relation to their own onlinemarketing strategy," he said. "It's a very important component ofthat strategy. But I don't think they should budget a quarter oftheir IT budget on social networking."

Meanwhile, with the focus on regulatory compliance increasing oflate, Maurice DiMeo, a partner with Ernst & Young, specializingin technology and security risk services, feels some smallerinsurers may not be prepared for what they are facing.

"A lot of smaller insurers are not ready, especially given therehasn't been the strongest oversight [in the past] from a regulatoryperspective," he said.

"Smaller insurers haven't had to deal with all the complianceissues, but now they are going to have to," added Mr. DiMeo. "TheOffice of National Insurance--the White House's plan to have theTreasury Department regulate insurance--is the wild card."

For larger insurers, the issue around compliance involvescomplexity, according to Mr. DiMeo.

"[Insurers] are complex organizations, and the geography comesinto play," he said. "The ability to regulate that is challenging.It comes back to issues such as data integrity. If you lack dataintegrity, it is hard to build systems to manage risks."

To listen to the entire archived July 30 discussion, go towww.tech-decisions.comand click on "Web Seminars."

(Robert Regis Hyle is an associate editor at TechDecisions, part of Summit Business Media's Property andCasualty Magazine Group, which includes NationalUnderwriter.)