Insurers need to carefully consider new technologyimplementations this year and next despite the budget-cuttingpressures brought on by the recession, one leading researchercontends.

Karen Pauli, director of research in the insurance practice atTowerGroup, based in Needham, Mass., recently authored a report on“Transformational Technology and Organizational Change: InsuranceCarriers' Chicken-or-Egg Question,” in which she addresses techpriorities for carriers.

We recently caught up with Ms. Pauli to find out what insurerscan do today to cultivate a technology vision to remain profitabletomorrow.

Q: Why even consider implementing technologiesduring an economic downturn?

Ms. Pauli: There are no easy ways for insurersto grow revenue substantially right now. Implementing now isperhaps the only way carriers are going to get expenses out of anorganization and manage their bottom-line results.

Many companies have been lowering expenses through staffreduction. Now the vast majority of carriers are at a point that ifthey reduce staff more, then it will become damaging to the overallbusiness.

So carriers need to find other ways to improve businessprocesses. If you don't introduce technology to remove unnecessaryhuman involvement and fill in deficiencies, then you willexacerbate the problem.

Also, consumers now expect more out of carriers, including 24/7access to services. Emerging technology is the only means by whichto provide that service.

Q: Should organizational change be addressedprior to adopting technologies?

Ms. Pauli: Absolutely, as this will foster theacceptance of technology. If you do not prepare an organizationappropriately, then you will invariably face resistance.

Any technology, regardless of its relative merits, can failbecause of a lack of buy-in. If you involve the entire company inthe preplanning stages, then you are likely to find betterimplementation roots and more robust ways to employ thetechnology.

Don't overlook the fact that no one knows how a company worksquite like midlevel workers. Involving the company in a thoroughprocess review will lead to more informed decisions. Managers willsometimes base purchasing decisions on price or what a competitoris using. Don't fall into this trap.

Insurance companies are very siloed in how they do things. Forexample, midsize commercial lines may do some things differentlythan small-business commercial lines, but there are multitudes ofprocesses and actions that are identical. Address those issuesbeforehand so there is maximum value coming from the dollars spenton technology.

A good case in point is electronic signature, which isproduct-agnostic. The same software can be used by legal, by claimsand in new-business production, but people want to be primarydecision-makers.

To be successful, an organization must bring all decision-makerstogether and empower everyone to make meaningful contributions.

Q: Specifically, what technologies will allowcarriers to address critical business issues?

Ms. Pauli: Predictive analytics are interestingin that they have huge applicability across an organization toimprove virtually every operational area.

They are being used to reduce a business' exposure to fraud aswell as for vendor management, subrogation and salvagedecision-making, and litigation management. We've also found themto be imperative in new business acquisition, marketing and callcenter environments.

Also, I think that business process management tools are crucialin promoting operational efficiency, which is essential in helpingcarriers to achieve financial stability.

No carrier can move forward, from a results standpoint, if theydo not finitely evaluate and manage individual business processes.Success starts at the bottom and rolls up. BPM tools allow acarrier to objectively measure progress and adjust practices andprocedures accordingly.

Knowledge management is kind of a green field area. It coversmany different types of technologies: document management, [instantmessaging], blogs, wikis and telepresence, just to mention a few.It's all about putting together a suite of technology to harvestknowledge and then access that information for collaboration.

Companies need to gather knowledge and have a rolling access sothe organization is always learning. I don't know anyone at thispoint who has said we're going full blast with this. We do knowthat carriers nevertheless understand the value of telepresence andvideo conferencing but are just not quite pulling all the rest ofthe components together just yet.

Q: What proactive approach should carriersemploy now to pave the way for success?

Ms. Pauli: Carriers need to start thinking at ahigher level about technology and not just use it at immediate painpoints. They should have a cohesive executive vision that shouldinvolve planning three-to-five years in advance in terms of how touse technology to create a competitive edge. It just can't be aboutpain-point management.

There's a bit of a switch-around for carriers to be driven byconsumer expectation and distributor expectations. Formerly, theplan was more contingent on what a carrier needed for its owninternal purposes. Companies today need to think about whatcustomers expect long-term and how to attract and maintain the bestdistributors to help them succeed and address those needs.

Christina Bramlet is Senior Editor atClaims magazine, a member of Summit Business Media'sP&C Magazine Group, which includes NationalUnderwriter. Check out Claims' Web site at www.Claimsmag.com.