Table Stakes

Competition is a powerful motivator. Whether toddlers competefor a parent's approval, students for the best grade, employees fora promotion, or companies for greater market share, the cycle ofcompeting, succeeding, and competing again to get or remain on topautomatically and continuously increases the table stakes to enterthe game and win.

As we begin a new year, insurers are focusing on where theycompete most–new business, new products, customer service,underwriting, and rating, to name just a few areas–with growth asthe ultimate goal. The question then becomes: What are the tablestakes for growth? The answer involves too much to handle in ashort space, but here are a few thoughts:

Analytics. The industry is using ever more sophisticated modelsand techniques applied to ever larger volumes of data to be smarterabout risk management, pricing, and fraud.

Security. Business success is dependent on trust between theseller and buyer. The table stakes are driven up daily by hackerswho come up with new challenges forcing insurers to be as proactiveas possible in protecting their customers' data. Equally, we can'tforget security's sidekick–regulatory compliance.

Real time. Not for everything, but definitely for some businessfunctions: pricing, fraud management, underwriting, claimsmanagement and first notice of loss, and customer service (bothagent and buyer).

Flexible systems. As Web services and service-orientedarchitectures grow, hurdles created by legacy systems will lessen.Consequently, expectations for speed to market and competitivelydifferentiated information access will increase.

IT-business alignment. "Among the leading insurers today, IT isbecoming so fully integrated into the business decision-makingprocess as to appear almost invisible," according to a BearingPointwhite paper, "How to Create a Platform for the 21st CenturyInsurance Firm." Exactly how pervasive true alignment is in theindustry, however, remains in debate. But what isn't debatable isits necessity.

Last and, perhaps, foremost, data management. Consider: Theindustry is having a tough time handling and integrating the datait already has. How much will data volume grow with expandingthird-party and internal resources, wireless technologies,telematics, and biometrics, for example? A Celent report, "UsingEmerging Technology for Competitive Advantage," indicates someinsurers already are using emerging technologies, while othersaren't. "This ever-widening gap will allow some carriers togain–and most likely sustain–a competitive advantage," the researchfirm contends. Among the technologies it says are in use by ahandful of insurers are open source software, GPS/GIS, wirelesstechnologies, and telematics. In the pilot stage or underexamination are grid, cluster, and/or utility computing, RFID, andelectronic forms.

Is there pressure? Definitely. But keep in mind the rush of achallenge and the thrill of accomplishment (and even some useful,though admittedly painful, lessons in failure). As the year and thegame begin, now is the time to check what's in your pocket–thosefinancial, technological, and human resources–then play to win.Good luck . . . and all the best in 2006!