Where would growth come from? Any general uptick in economicactivity will generate a larger insurable pie. But insurance is amature industry marked by slow growth and low profit margins. Manyof its products are regarded by the purchasing public ascommodities that are bought (and sold) largely on price. How canthe IT shop of an insurance carrier help position the company forgrowth? There are a couple of obvious levers IT can help to pull incombination with its business partners.

First, there is growth. Given the maturity referred to above,growth for most insurers can come only at the expense of othercarriers--either by acquiring business from other companies or byacquiring the companies themselves. The well-established trendregarding building and deploying high-performing agent portals isrecognition (by carriers with independent agency distributionchannels) that most new business will be another carrier's oldbusiness. Our firm has seen firsthand the leverage of aneasy-to-use quote and new-business capability deployed to anindependent agency carrier's sales force. In two instances duringthe current recession, carriers we work with have driven highersubmissions, better quote-to-issue ratios, and enjoyed moreprofitable pricing through agent portals supported by automatedunderwriting, predictive analytics, and straight-throughprocessing. This business, by definition, came almost exclusivelyfrom the competition.

In terms of acquiring the competition, the leaner, morerationale, and modern the core systems environment, the betterplaced the carrier is to absorb the IT requirements of an acquiredcompany. Difficult and time-consuming as it is, it is criticallyimportant for carriers to rationalize the IT technical andapplications portfolio following an acquisition in order to retainagility and responsiveness to the business. Our firm also has beeninvolved with a carrier that over the past four years finally hasrationalized the irrational results of 20 years of growth byacquisition. That carrier, which currently has only two policyadministration systems (down from six), is now active again in theM&A market.

Second, there is expense reduction. The less costly theday-to-day operation, the more the carrier can spend on growthstrategies, including returning premium dollars to the customer.There are cost-savings opportunities in the underwriting and policyprocessing world, but the single biggest financial fact of all isinsurers spend 70 cents of each dollar on claims. While only 10 to12 cents is spent on claims administration, rather than claimspayments, this still is a target-rich environment for savings.Carrier IT departments should be actively involved in replacingcore claims administration systems that can reduce indemnity aswell as expense dollars. One of our clients estimates annualsavings of more than $2 million in reduced rental reimbursementalone from faster claim settlement. For those carriers that havemade the move to a modern claims administration system, there aremultiple second-tier applications that should be investigated.These include fraud analytics, checkless payment systems(especially for workers' comp), adjuster scheduling (for largerauto insurers), and the integration of event data recorder (EDR)data into auto-crash investigations. These tier-two applicationscan have significant and rapid ROI and place the carrier in abetter position to reallocate resources to support growth.

George Grieve is CEO of CastleBay Consulting and a regularcontributor of Tech Decisions' "Shop Talk" column.Previously a CIO and still an acting consultant, he has spent muchof the past 25 years with property/casualty insurers, assistingthem in the search, selection, negotiation, and implementation ofmission-critical, core insurance processing systems. He can bereached at 512-329-2619.

To learn more about "2010: The Road to Recovery" and to hearGeorge Grieve expand on how to position IT for the coming businesspush, register for the Web seminar sponsored by TechDecisions. Click here for more information: http://www.tech-decisions.com/webSeminars/2010RoadtoRecovery/Pages/default.aspx?pc=TDseriesSite