The momentum behind the integration of communication andinformation is unstoppable. The profound explosion in the use ofmobile communication is forever changing the way people interact inboth personal and business relationships. Insurers and agents arebeing challenged to meet customer expectations that are largelybeing set outside the insurance industry. As communications andinformation technologies continue to explode, consumers will expectoffers and service on their terms.

Re-think, Re-energize, Re-tool

The importance of being equipped to manage and navigateexpanding distribution channels increases daily. Channels need tobe exceptionally fluid. The bottom line? Insurers must be able toprovide communications any way a customer wants to receive them.Unfortunately, customers' preferences don't always align with howinsurers would like to deliver them. Providing a quote via awebsite works for some customers, but it doesn't work for all.While mobile apps are gaining traction daily, they are not theanswer for everyone. The fact is that it is no longer aone-size-fits-all market.

It's time to re-think, re-energize, and re-tool distributioncapabilities. Insurers must have middle- and back-office systemsthat are ready to send and receive any type of data, whetherstructured or unstructured, via any device, method, or platform.Sales and servicing capabilities must be able to manage allinteractions with customers and prospects, claimants,agents/brokers, and third parties. Now is the right time to thinkbig and think broad—to create the architecture that will deliverthe flexibility—and then to start small, with one project, onedevice, one method at a time.

The fundamental objective is agility. It's not just about thefeatures and functions of a solution. Equally important are thetechnology and the architecture that create a foundation forflexibility. SMA's research on IT investments reveals a notableshift in emphasis from the back office to the front and middleoffice. Insurers are giving top priority to projects that will helppartners increase their own productivity and improve new businessand underwriting workflows.

Think Big, Act Small

The path to creating highly dynamic distribution channels willvary based on an insurer's business mix, distribution partners, andcustomer characteristics. But for many insurers, projects getdelayed because the perceived complexity of addressing this toughtopic is overwhelming. A three-step approach can help insurers moveforward in an orderly fashion. Using these three steps, insurerscan lay out a clear path for capitalizing on the evolvingintegration of communication and information.

Step 1: Think Big—Understand RequiredCapabilities

Even if work to support more advanced channels is alreadyunderway or in planning, don't be afraid to take a new view. Startat the beginning by educating all stakeholders on what isstate-of-the-art. Then investigate what's coming next by looking atthe state-of-the-possible. Explore leading trends in thedistribution space to find out what key competitors are doing.Outline the set of business and technology capabilities that willsatisfy business goals. Carefully look at:

• How are distribution channels shaping up? What determinesleaders today? What will do so tomorrow?
• What are our points of vulnerability? How can we strengthen ourposition?
• What are the required capabilities for our company?

Step 2: Act Small—Prioritize Capabilities andSolutions

Analyze the information gathered in Step 1, and use it todevelop and prioritize the list of required solution components. Toperfect this analysis and prioritization, leverage research,experience, IP, and deep knowledge of the solution capabilitiesthat are available in the marketplace. And because they are sointer-related, it is important to evaluate and clarify synergy andintegration between the policy administration system, theunderwriting desktop system, and distribution channels. Strive todefine:

• What are the most pressing capabilities that the company needsto meet shorter term business needs and longer term businessgoals?
• What solution capabilities are available in the marketplacethat will enable dynamic distribution channels?
• What internal constraints exist that will influencepriorities?

Step 3: Drive Dynamic Distribution Channels with an ITRoadmap

In the final step, create an IT roadmap that lays out the majorsteps and technology investment required over the next three tofive years, with high-level estimated costs. This will serve as thecornerstone of the IT investment plan and guide the direction ofprojects and plans. Consider the following:

• What is the overall investment requirement to deliver theneeded capabilities?
• Which investments are foundational and which areincremental?
• What steps or projects are co-dependent? What steps or projectscan be delayed if necessary?

Act Now

Insurance distribution is changing in ways that not all insurersare ready to acknowledge, much less manage. But this is an areawhere an 'ignore and wait' attitude won't cut it. Insurers thatcontinue to take a wait and watch stance may find it impossible toplay a game of catch-up. It is clearly the time to act. Drivedynamic distribution channels in your organization—now.

Deb Smallwood, the Founder of SMA, is recognized for herexpertise in deciphering how IT spending trends influencecompetitive advantage in the insurance industry. She offers a freshperspective on how business capabilities can meet strategic goals.Exclusively serving the insurance industry, Strategy Meets Actionblends unbiased research findings with expertise and experience todeliver business and technology insights, research, and advice toinsurers and IT solution providers. Deb can be reached [email protected].

SMA and Tech Decisions are launching a new study toinvestigate insurance distribution dynamics. Watch for the surveylate this summer. Results will be shared in a webinar planned forthis fall.