Top 10 Technology Trends 1999-2009

As Tech Decisions celebrates its 10th anniversary, the editors have selected the 10 top technology trends the insurance industry has experienced over the last decade. Here they are with a few thoughts on each from several leading industry analysts.

1 The Web
Ten years ago, the Web, as we know and love it, did not exist in the insurance industry. Today, points out Larry Danielson, principal with Deloitte Consulting, it has become the way many insurers do business, not only from a distribution standpoint–the way many insurers sell their products–but the way people actually gain information. "There was a void 10 years ago," he says. "The Web has filled the void around direct communication. Policy administration and claims are Web-enabled applications that didn't exist before. It's opened up whole new ways for companies to process business."

2 Content Management
Ten years ago almost all content was managed via paper and produced manually, recalls Karen Pauli, research director at TowerGroup. "The expense was enormous, and access to content was very labor intensive," she says. "Today's content management technology allows content to be an enterprise asset without the access constraints of old." Pauli believes the definition of "content" will continue to unfold as wikis, blogs, and instant messages drive information into carrier operations. "Enterprise content management will form the base for future knowledge management systems, which will be transformational for carriers," she says.

3 Predictive Analytics
The blending of predictive analytics engines along with business intelligence and data strategies have changed the landscape of the insurance industry, according to Deb Smallwood, founder of SMA. "Insurers now are able to align the right product to the right customer to the right distribution channel; expand risk appetite and price with more precision; process, adjust, and report claims more timely and thoroughly; and manage financials in real time looking forward rather than through the rear-view mirror," she says. "This is only the beginning of the infinite possibilities that can be achieved by leveraging these tools and our internal and external data sources."

4 Enterprise Risk Management
Before the acronym ERM existed, IT's role in this arena began as availability, continuity, and disaster recovery initiatives, explains Rod Travers, senior vice president of Robert E. Nolan Co. "ERM has evolved to encompass the realm of corporate risk management, which includes liability protection, people and behaviors, process design and adherence, operations resiliency, technology, finance, compliance, and perhaps more, depending on how you define ERM," he says. "IT's role today is to: a) provide a reliable, resilient technology infrastructure; b) enable the organization to apply the right technologies to support ERM; c) maintain a vigil on evolving ERM technology solutions, and implement those that materially improve ERM programs."

5 Disaster Recovery
Prior to the September 11, 2001, attacks on the World Trade Center and the Pentagon, disaster recovery was all about making certain computer systems were backed up at a secure, off-site location, according to Pauli. "This was an IT project, and line-of-business heads were not involved," she says. "Business interruption really was not on anyone's radar." The events of 9/11 illustrated the degree to which businesses have to establish alternatives for data access, work-site locations, service access, and hardware, adds Pauli. "Hurricane Katrina reinforced the imperative everyone–from agents and brokers right to carrier home offices–must plan for large-scale operational shifts to alternate locations, including workers working out of their homes."

6 Outsourcing
The development of talent within IT operations has been a major improvement for insurance carriers, Danielson maintains. In particular, that includes the arrival of outsourcing. "Ten years ago, technology companies were saying they didn't have enough talent," says Danielson. "There are a lot of very smart folks throughout the world, and we can't be myopic by looking just at things in the United States. As we looked at people who can do things in all countries of the world, we started looking at 24/7 applications of talent. As you are able to aggregate people with certain talents, we see the advent of centers of expertise popping up through companies that have set up operations in different geographies."

7 Business Process Management
BPM has become a natural fit for the insurance industry, points out Matt Josefowicz, director of insurance for Novarica. The two core processes of insurance–underwriting/issuance and claims–are complex, multiparty processes that require accessing and interacting with a wide variety of documents and data. "Optimizing those processes and making them more transparent to managers, distribution partners, and customers is key to creating efficiencies and improving service levels," he says. "Few insurers really have adopted an enterprise BPM platform that manages most aspects of their business, but many have created underwriting, servicing, or claims process environments using BPM tools."

8 Compliance and Security
Sarbanes-Oxley dramatically changed how financial processes are structured, automated, and monitored, notes Travers. "IT was thrust into providing a new level of support and greater responsibility, and in some cases, the CIO/CFO relationship was strained beyond what is commonly a tense balance," he says. IT leaders found a way to turn compliance to a positive by implementing cost-saving process automation tools and putting their support behind process retooling efforts. Security always has been a challenge and has ballooned into a huge problem. "With so many points of access, so many endpoints, and so many opportunities for breaches to occur, IT never can completely mitigate all the risks," says Travers.

9 Aging IT Systems and Work Force
Most insurers are faced with the lethal combination of the aging IT work force and legacy systems, explains Smallwood. "Many insurers continue to nibble away at the issue through legacy replacement and migration plans, staff augmentation, and formal documentation, but this continues to be a high-risk area," she says. "Gen Y will not likely maintain those COBOL programs, and the extensive knowledge that is trapped in the baby boomers' heads soon will be gone. Unbundling legacy code into technology tools and developing enterprise architecture with IT road maps are the best ways to tackle this challenge."

10 Service-oriented Architecture
SOA became a top-of-mind issue for insurer carriers in 2002 and 2003, according to Josefowicz. "The true value of SOA for the insurance industry has been tactical rather than strategic," he says. "By creating reusable integration points using SOAP/XML, insurers have reduced the complexity and cost of integration by as much as half or more. SOA has been a critical tool for insurers to deploy new business capabilities over the past five years."