Where would growth come from? Any general uptick in economic activity will generate a larger insurable pie. But insurance is a mature industry marked by slow growth and low profit margins. Many of its products are regarded by the purchasing public as commodities that are bought (and sold) largely on price. How can the IT shop of an insurance carrier help position the company for growth? There are a couple of obvious levers IT can help to pull in combination 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 other carriers--either by acquiring business from other companies or by acquiring the companies themselves. The well-established trend regarding building and deploying high-performing agent portals is recognition (by carriers with independent agency distribution channels) that most new business will be another carrier's old business. Our firm has seen firsthand the leverage of an easy-to-use quote and new-business capability deployed to an independent agency carrier's sales force. In two instances during the current recession, carriers we work with have driven higher submissions, better quote-to-issue ratios, and enjoyed more profitable pricing through agent portals supported by automated underwriting, predictive analytics, and straight-through processing. This business, by definition, came almost exclusively from the competition.

In terms of acquiring the competition, the leaner, more rationale, and modern the core systems environment, the better placed the carrier is to absorb the IT requirements of an acquired company. Difficult and time-consuming as it is, it is critically important for carriers to rationalize the IT technical and applications portfolio following an acquisition in order to retain agility and responsiveness to the business. Our firm also has been involved with a carrier that over the past four years finally has rationalized the irrational results of 20 years of growth by acquisition. That carrier, which currently has only two policy administration systems (down from six), is now active again in the M&A market.