Toward the end of 2003, insurers still wondered whether there was anything left in their budget that could be cut. Today, that mindset hasnt disappeared, but the industry has rebounded, inhaling some fresh airgrowth. The hard market yielded profits that can pay for new systems, both traditional and emerging solutions. To dust off a clich: The only constant is change.
A Gartner report issued last July, titled, Emerging Technology Hype Cycle for the Insurance Industry, 2004, states the insurance industry is a hot spot for emerging technology. Not all are new, but development is rapid.
The study plotted what Gartner views as the typical progression of a technologyfrom initial introduction to broad market acceptanceconsisting of five phases: Technology Trigger (a product launch); Peak of Inflated Expectations (overenthusiasm and unrealistic projections, with some successes and more failures); Trough of Disillusionment (overinflated expectations leading to the technology becoming unfashionable); Slope of Enlightenment (experimentation leading to true understanding of the technologys applicability, risk, and benefits); and Plateau of Productivity (technology gains widespread acceptance).
Technologies in the Trigger stage, according to Gartner, with five to 10 years until Productivity, include automated and exception-based underwriting tools; with two to five years, advanced fraud detection, SEMCI, and corporate mobile and wireless claims applications. Web services, claims management, e-signatures, and GIS systems list in the Inflated Expectation stage, with two to five years to Productivity; with less than two years, business process and incentive compensation management solutions. ERM and CRM tools fall into Disillusionment. Closest to Productivity are business rules engines, data mining, and document imaging/content management.
So, change is near and largely for the better (for more, see IT 2005: The Light of Day, p. 12). Were revitalized, with lots of tools on tapexcept maybe onean integrity chip.
Following the revelation of New Yorks probe into contingent commissions, a couple of enterprise incentive management (EIM) system companies contacted me offering commentary on the investigation and explaining how their products could deliver control and visibility into compensation systems.
EIM tools could help carriers to get a better handle on commissions in general, including contingent commissions, says Chad Hersh, a senior analyst at Celent and author of an EIM study. Thus, carriers could do a better job reporting such commissions, as disclosure and transparency become far more critical. However, he explains, the benefit of EIM has been on the life sideit never has been aimed actively at P&C carriers. Given the sudden urgency for P&C carriers to track contingent commissions more closely, EIM offerings may be tweaked for use by P&C carriers, he adds.
Its sad a year on target for a happy ending was tainted by unethical behavior. Systems and procedures provide boundaries, deterrents, and detection but cant guarantee ethical actiononly people can do that. Lets resolve to exploit all the technologies that help the industry prosper while plying this trade in a way an integrity chip wont ever be needed.
Sharon S. Schwartzman
Editor-in-Chief
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