Novarica just released its Insurance Information Technology 2011 report and to no one's great surprise core systems rank at the top of the to-do list for insurers. All the major consulting groups annually look at priorities for IT spending and the only suspense would come if one of them did not include core solutions at the top of the list.
The industry has had some distractions the last few years and that meant some projects had to be put aside—at least temporarily.
We'd all like to think that the sharpest strategists in the industry took that time to invest in their core solutions. I'm sure all those key leaders recognized this was an excellent opportunity to gain a competitive advantage in the market, but the reality is caution was in the air and spending millions on system replacements in the midst of a recession proved to be a test of an insurance carrier's risk management capabilities.
But we appear to be emerging from the financial malaise and there will be competitive advantages gained by those who are once again looking at their core solutions—policy administration, claims, and billing—either as a whole or in part.
Matt Josefowicz of Novarica will be one of the speakers for a Tech Decisions Web seminar on Thursday, Feb. 24 that focuses on Hard Core Solutions. (Karen Furtado of Strategy Meets Action and Donald Light of Celent will also be on the virtual dais.)
In his latest report Josefowicz writes: "Policy administration (including rating, underwriting, and product management) is the highest priority area for insurers in 2011, since it is critical to introducing or modifying products, serving customers and distributors, and sourcing data for business intelligence."
Josefowicz adds that the scope of policy administration system replacements or upgrades varies widely, from core solutions to full suites.
"Claims is a perennial focus area for property/casualty and is on many large insurers' priority lists," he says. "Billing as a stand-alone area is not at the top of many lists for 2011, but more than half of property/casualty policy administration systems suite projects include billing. As the most common interaction that insurers have with their customers, billing is a service as much as a financials issue."
Making such a decision is difficult. Will the millions spent allow your business to earn millions more to cover the time and expense of a policy administration project? Pessimists say no to that question, but pessimists aren't always good at what they do.
Josefowicz's partner at Novarica, Chad Hersh, has an interesting concept he discussed in the January issue of Tech Decisions: moving from efficient to proficient.
"Getting by" lasts only so long for insurers before things begin to crumble. There comes a point in time when investment is the only option. At that point it might even be too late.
What kind of a carrier are you? Efficient or proficient?
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