Carriers looking to Web-enable their front-end system (or replace it entirely) are in for some good news, according to Matt Josefowicz, senior analyst for insurance at Celent Communications. In separate reports for the property/casualty and life/health segments, called Profiling the Vendors of Web Front-End Systems, Josefowicz says new systems available on the market and maturing older systems have a depth of richness necessary to be considered by carriers. Carriers can find solutions to such problems as developing new business, self service, field force management, document distribution, and online quotes.
Josefowicz looked at 16 vendors on the P&C side and 24 on L&H and concluded any size carrier should explore vendor solutions, no matter what the resources of its IT department. Even if you have the staff [to build a solution], its a matter of time spent on the project and not wanting to reduplicate effort, he says. Developing software is hard. For the insurance industry its not its primary core competency, so a lot of larger carriers are willing to start with a pre-existing product and customize it if necessary. In an earlier study on IT spending, Josefowicz found insurers from all segments are spending 25 percent more on new software than what is spent on maintenance of existing products.
He notes carriers are turning to Web-based front ends because of their flexibility and the ability to perform tasks the legacy systems cant achieve, such as product development and data mining. A lot of legacy systems make it time-consuming and expensive to introduce new products because theres a significant IT bottleneck, he says. Josefowicz believes data mining can significantly help carriers in underwriting. It can give them a true picture of their exposure, he says. If you dont know which customers have multiple policies, you dont really know what your exposures are.
Josefowicz believes carriers and technology builders have reached a common ground with the Web. Rather than competing in online offerings with insurers, technology developers have focused on helping insurers improve their Web presence. The insurance industry has seen the light as well. Insurers are looking to the Web to save money and are not hiding under the bed from it, afraid [insurance Web sites] are going to steal all their customers, he says.
Josefowicz issues a warning to insurers: Even if you buy a pre-packaged vendor solution, the vendors are still going to need access to your business and IT staff in order to make it work smoothly with your existing solution.
Carriers also fail to pay attention to the areas of adoption and training. You can have a perfect new system that no one understands, says Josefowicz. They have to understand why its better than the way theyve been doing it for 10 years. You dont get any ROI out of those [failed] situations because you dont change anyones behavior. Robert Regis Hyle
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