Competition is a powerful motivator. Whether toddlers compete for a parent's approval, students for the best grade, employees for a promotion, or companies for greater market share, the cycle of competing, succeeding, and competing again to get or remain on top automatically and continuously increases the table stakes to enter the game and win.
As we begin a new year, insurers are focusing on where they compete most–new business, new products, customer service, underwriting, and rating, to name just a few areas–with growth as the ultimate goal. The question then becomes: What are the table stakes for growth? The answer involves too much to handle in a short space, but here are a few thoughts:
Analytics. The industry is using ever more sophisticated models and techniques applied to ever larger volumes of data to be smarter about risk management, pricing, and fraud.
Security. Business success is dependent on trust between the seller and buyer. The table stakes are driven up daily by hackers who come up with new challenges forcing insurers to be as proactive as possible in protecting their customers' data. Equally, we can't forget security's sidekick–regulatory compliance.
Real time. Not for everything, but definitely for some business functions: pricing, fraud management, underwriting, claims management and first notice of loss, and customer service (both agent and buyer).
Flexible systems. As Web services and service-oriented architectures grow, hurdles created by legacy systems will lessen. Consequently, expectations for speed to market and competitively differentiated information access will increase.
IT-business alignment. "Among the leading insurers today, IT is becoming so fully integrated into the business decision-making process as to appear almost invisible," according to a BearingPoint white paper, "How to Create a Platform for the 21st Century Insurance Firm." Exactly how pervasive true alignment is in the industry, however, remains in debate. But what isn't debatable is its necessity.
Last and, perhaps, foremost, data management. Consider: The industry is having a tough time handling and integrating the data it already has. How much will data volume grow with expanding third-party and internal resources, wireless technologies, telematics, and biometrics, for example? A Celent report, "Using Emerging Technology for Competitive Advantage," indicates some insurers already are using emerging technologies, while others aren't. "This ever-widening gap will allow some carriers to gain–and most likely sustain–a competitive advantage," the research firm contends. Among the technologies it says are in use by a handful of insurers are open source software, GPS/GIS, wireless technologies, and telematics. In the pilot stage or under examination are grid, cluster, and/or utility computing, RFID, and electronic forms.
Is there pressure? Definitely. But keep in mind the rush of a challenge and the thrill of accomplishment (and even some useful, though admittedly painful, lessons in failure). As the year and the game begin, now is the time to check what's in your pocket–those financial, technological, and human resources–then play to win. Good luck . . . and all the best in 2006!
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