An aging population along with increased technology use will force major changes in how insurers operate, according to a new report.

The Needham, Mass.-based TowerGroup's study noted, among other things, that insurers are increasing their spending for mobile technology at a compound annual growth rate of 18 percent, despite an annual overall increase in technology spending of only 3 percent.

"The proliferation of Internet use and mobile technology will improve the experience of insurance producers, customers and employees by simplifying complex interactions and automating routine tasks," the report said.

Report author Cynthia Saccocia said that the increased use of mobile technology will drive growth by improving data collection for risk analysis. "Within three years, mobile solutions in the insurance industry will transition from being nice to have to being necessary for competitive standing," Ms. Saccocia said. "It will enable self-service."

Insurers' increasing use of service-oriented architecture [SOA] is more of an evolutionary than revolutionary change. The industry has moved from a system in which a big mass of code runs a series of processes from start to finish to one that permits re-use of modular functional systems components and data, Tower found.

"SOA is a means of reducing complexity, increasing re-use, streamlining maintenance and improving speed-to-market of new capabilities," the report said.

As for the aging population, the impact on the life and health industry is obvious as retirement products become an increasing part of a carrier's book of business.

For the property-casualty industry, the impact remains less clear. "In automobile insurance, carriers will create finitely detailed rating plans rather than broad-spectrum rating plans for those over 55," the report said.

An aged populace will drive an insured's rating that is more specific, because carriers will want to retain their best customers, the report added.

Special Reports /

Aging, Tech New Factors For Insurers: Tower

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