Transformational technologies are at your disposal, so the issuethen becomes one of prioritizing investments and building abusiness case for new technology use.

To help guide chief information officers in technologyevaluation, Gartner generates annual "Hype Cycles" that profileemerging and new technologies to show the level of maturity,adoption rates and business value of each. This research helpsfurther analyze those technologies, identifying the ones that willhave the biggest impact on the p&c industry over the next fiveyears.

(To read Kimberly Harris-Ferrante's vies on insurance industrystandards, read this archived Tech Decisions article. To read what she had to say on the 2010economy, click this article.)

These technologies will be "game changing." They will challengeexisting business processes, support the emergence of new businessmodels and allow companies to successfully differentiate to driverevenue growth.

Determination of these technologies is based on Gartnerobservations and discussions with clients globally.

There is a long list of emerging technologies that p&cinsurers can use to improve their processes--from productdevelopment through customer service. Many of these technologies,however, provide only incremental or minor improvements, havelimited-to-no return on investment, or do not have the promise tohelp p&c insurers radically change their business models,reduce operational costs or generate revenue.

With budgets challenged, and with limited funding fordiscretionary spending, it is imperative that organizationsprioritize their investments to those that will generate thegreatest ROI and drive the most value.

Based on Gartner's review of the p&c insurance sector,software market, client priorities and past Gartner studies, thetop-10 technologies with the greatest impact for p&c insurancehave been identified.

Note that some are more applicable to personal lines becausemuch of the industry change projected during the next five years isa result of evolving technology use among consumer groups.

The following are what we believe will be the top-10technologies for p&c insurance, although not in any particularorder. The importance of each technology depends on your individualneeds and market niche:

o M:

There have been significant improvements in the software marketduring the past six-to-seven years.

Vendors have developed modern policy and claims managementsystems that are componentized (sold independently, rather than ina suite), offering enhanced workflow and business processmanagement capabilities, with rules separate from the source codefor easy configuration, supporting industry standards (for example,ACORD Standards), and built on newer technology platforms.

The adoption of these systems by personal and commercial p&cinsurers can provide significant value, including reduced totalcost of ownership when legacy systems are decommissioned, fasterrules and workflow changes, easier integration with surroundingsystems, reduced challenges with staffing to support oldtechnologies and programming languages, and improved long-termmaintenance.

o :

Insurers operate a large ecosystem of systems and applicationsthat integrate for seamless processing. In the past, companies hadto hard-code integration between systems, which was costly andtime-consuming, created challenges when applications were replacedand integration had to be redone, and often was difficult overalldue to technology incompatibility.

The use of Web services/service-oriented architecture enablescompanies to deploy services instead of using one-to-oneintegration, and will help insurers improve their straight-throughprocessing capabilities and reduce integration costs.

:

Property and casualty insurers are increasing their focus in2010 on improving how data is used and the value derived from pastinvestments in data warehousing.

Expanded use of data mining and analytics will assist p&cinsurers in obtaining more-granular insight into customers; greateroperational performance; better claims performance; and reducedlosses, leakage and underwriting risks.

The outcome will be improved risk management,compliance/reporting and customer intelligence that can be used forpersonalization and decisions regarding channels and products aswell as provide insight into performance and process problems.

:

Traditional data analysis processes are typically historical(analysis and reporting of the past) or current day (analysis andreporting of current day position). Using predictive modeling,insurers can analyze data and create models that will enable themto predict future behaviors or outcomes.

Using predictive modeling will allow companies to look into thefuture and make predictions based on historical data analysis,pattern recognition and modeling.

This insight will help companies avoid risks, understand futurecustomer behavior so that they can intervene as needed, offerproactive customer service, project losses due to a catastrophe andimprove underwriting profitability.

:

It is critical that insurers reduce losses and leakage to retainprofitability. Better control of fraud is essential inaccomplishing these goals.

Advanced tools analyze data (structured and unstructured) toidentify fraudulent claims in real time at point of data entry.This will assist insurers in reducing losses that result in drivingup operational costs, and may result in companies having toincrease premiums based on these losses.

:

These are among the newest interests among insurers. Inquiriesfrom Gartner's p&c clients spiked in 2009, as many companiesbegan to craft their social networking strategies for internalemployees, agents and marketing.

Driven by increasing use of social networking among consumersand policyholders, leading-edge insurers quickly began to set uptheir own communities, monitor social-networking conversations, andcreate content for the network.

Social networking may possibly have a disruptive impact on theindustry as it increasingly becomes a trusted source of adviceamong consumers.

:

Interest in product development and configuration has beencyclical, with interest varying by year and region. One of the topbusiness priorities among p&c insurers is improvingspeed-to-market for new products. Legacy environments make thistask difficult, if not impossible.

New systems, such as product configuration, are needed to shiftdevelopment to the business users, manage the product life cycle,support product testing prior to putting products into production,and facilitate product componentization to further help insurerswith product bundling at the point of sale.

Their use will help drive down product development cost--but,more importantly, allow insurers to get products to market fasterthan their peers that continue to rely on legacy systems.

Furthermore, it will allow leading-edge companies to be productleaders that can create niche products in a cost-effective manner,respond quickly to emerging product needs and support on-demandcustomization of products.

o BPM Solutions, Including Workflow and RuleEngines:

Insurers have been using tools to help manage business processesfor several years, but projects traditionally have focused onworkflow without leveraging the complete capabilities in thesesystems.

To optimize processes, insurers are increasingly implementingnew tools such as business rule engines and BPM solutions to helpautomate core processes, have an application development tool fornew core systems, extract rules from legacy systems to make themmore accessible, and aid in decision support in areas such asunderwriting or claims adjudication.

BPM holds promise for insurance because it enables companies tomodel, analyze and test business processes independent of coresystems. Process problems can be easily identified, and companiescan manage process variety (offering various processes for a singletask for different user groups).

BPM solution use will result in being more customer-centric,driving improved user experiences through the Web channel, fastertransaction processing, staffing productivity improvements, lowercost of transaction processing, more consistent decision-making,improved risk management as well as improved customer service.

It is important to note, however, that ROI is directly relatedmore to the process to which BPM is applied and how processes areoptimized, rather than the technology used to support BPM.

:

The Internet has become a core component of operations forpersonal and commercial lines insurers. It is a tool to interactwith agents, consumers and policyholders.

The use of portal technologies for agents and policyholders iscritical as a means to offer access to sales/customer servicesystems, corporate information and data.

Companies must ensure that these portals support fulltransaction capabilities and meet user needs, including havingeasy-to-navigate user interfaces, real-time data access, andstraight-through processing for new quotes, policy issuance andcustomer service tasks (for example, bill presentment and payment,and first notice of loss).

Using portals for self-service for both constituencies will helpcompanies drive down costs when there is adequate user adoption,while empowering users to conduct transactions themselves.

In addition to the portal, interactive Web technologies are alsoneeded to improve the user experience. Chat, shared screens,callback tools and video graphics that simulate gaming are alltools that will help personal lines insurers improveinteraction--especially with younger demographic groups.

Using Internet sites as an interaction and transaction tool willhelp companies reduce transaction costs, improve user experienceand satisfaction, and reduce call center volume.

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Insurers are being confronted with the growing need to offermore services to agents and consumers through mobile devices--anddemand will intensify during the next five years.

Younger generations are accustomed to using mobile devices ascommunication and interaction tools, using them for searching theWeb, taking pictures, recording videos, checking account balanceswith the bank, text-messaging and other daily tasks.

Mobile technologies will provide p&c insurers with a greattool to equip their agents with real-time information andcontacts.

Launching mobile applications is becoming popular, especially inthe United States, for insurers that want to generate a new brandimage and offer tools to customers for finding an agent orsubmitting a claim. Many companies have already launchedapplications for the iPhone for these activities, and companies inEurope are starting to do the same.

Kimberly Harris-Ferrante is a vice presidentand distinguished analyst at Gartner Research in Wake Forest, N.C.She may be reached at [email protected].