Outsourcing Options Help Level the Tech Playing Field for Small/Regional Carriers

When comparing small carriers with international giants, one common competitive edge ascribed to the big guys is their advantage in the technology realm: They have the economies of scale to make substantial investments in sophisticated technology, such as advanced predictive- modeling tools.

But vendors argue that the benefits of cutting-edge technology are not reserved for those with deep pockets. They are accessible to everyone, and third-party companies are available to help small carriers “put data through the press,” says Marty Ellingsworth, president of ISO Innovative Analytics.

“We are able to package what we learn into a set of products, building an industry solution to get around the obstacle [of cost],” Ellingsworth adds.

The cost is less than paying one full-time predictive modeler, he says, adding that ISO has been successful in convincing chief financial officers, information technology professionals and legal counsel that “they can save money by buying a solution off the shelf that works, and it's built at a price point to sell.”

“If we can go in and confidently say, 'We're giving you a better, more accurate rate,' they listen,” Ellingsworth adds.

Falls Church, Va.-based CSC also provides customized technology solutions that it says enables smaller insurers to enjoy the same benefits as larger companies, with products that make it possible for smaller insurers to focus their efforts on underwriting—and outsource the rest.

“With various deployment options, small/regional insurers can ramp up quickly and take advantage of robust software with affordable, pay-per-use models,” says Susan Hunter, vice president in CSC's property and casualty insurance division.

Pay-per-use models, and the growing use of cloud-computing options, also work in the favor of smaller players—because they would have a far more difficult time recovering from a bad, in-house technology investment than their larger competitors. 

“They don't have unlimited resources to call for a do-over,” notes Chuck Chamness, president and chief executive of the National Association of Mutual Insurance Cos.