Nods of agreement were prevalent as audience members at Boston-based Celent’s annual CIO roundtable, “Managing IT in Times of Crisis,” heard a panel of four insurance CIOs discuss how the global financial crisis is affecting their respective company’s business operations. The annual event, held last week in New York, brought together top insurance executives from all lines of business.

Donald Light, senior analyst with Celent, opened the meeting by sharing results of the consultancy’s 2009 U.S. CIO survey, “2009 US Insurance CIO Survey: Pressures, Priorities, and Practices.” For the survey, Celent conducted interviewed 33 total CIOs from both the property/casualty and life/annuity/health lines of business.

Light pointed to three business issues that survey respondents predict will dominate the concerns of insurance CIOs in 2009. For the second year running, growing the business is the top issue for property/casualty carriers, and is tied for top issue for life/health insurers. Cost reduction (tied for the top issue for life/health insurers) is the second-most important issue. Light said this news is “not shocking, given that revenue is currently down and expenses, therefore, must also go down.” Finally, distribution is the third-most important problem, said Light. “With expense control also being inherent to proper management of distribution channels, most of the benefits of being a good business partner come from having higher retention of current business, and gaining a larger share of the new business that the producer controls.”

Asked to consider these issues as the backdrop, the panelists, one of whom was the recipient of Celent’s Model Carrier of the Year, provided a perspective on how their companies are conducting “business as usual” during the current economic downturn.
Moderator Craig Weber, Celent’s SVP, Insurance, asked the panel to frame their IT spend strategies against the question “is the sky falling,” Russ Bostick, EVP, Technology and Operations at Conseco Services LLC, an Indianapolis provider of financial services products to the consumer middle market, reported that his company may be the exception (having emerged from bankruptcy), spending 40% less in IT in 2008-2009 than in 2004. “However we will spend only 8% less in 2008 vs. 2007. Our more radical spend changes really reflect where our company has been and where it’s going.”

Paul Vancheri, SVP and CIO of Boston-based Fidelity Investments Life Insurance Co., a provider of investment and retirement products, reported that if his company is in an IT crisis right now, “it’s a comfortable place to be.” Vancheri told the audience that his company is “doing the same things we’ve been doing for years—responding to pressure,” he said. “The sales groups are under pressure because they have to deliver more with less. This means more investment in IT.” Thanks to processes put in place ahead of the recession, Vancheri added, Fidelity’s budget is adequate.
From his perspective, offered Benjamin Roberts, CIO, Commercial Lines, Middle Market & Specialty at The Hartford P&C, the economy is presenting opportunities for growth. “Clearly the U.S. is in an economic crisis, but as you apply that to the overall economy, you see pockets,” he said. “We are looking at performance by line of business and we are seeing the need for us to pinpoint what we are bringing to the marketplace. Within the middle market, it’s more about growth and cost control. With our specialty lines it’s about streamlining business within the channel. So we need to be more thoughtful abou what our produce s need. And, we are using technology to become much more scientific as to segments we target.”

Offering an upbeat assessment and action plan, Andy Edwardson, VP, Information Technology for Farmers Alliance, and winner of Celent’s 2009 Model Carrier award, told the audience that it’s during tough times that the business turns to IT for help with business objectives. “It’s a time when IT can really shine,” he said. “It may be wishful thinking to say the economy won’t affect us. You start down a path during a time line—this is when we think you should be investing in working with agents and building on those relationships. Our budget is adequate at this point in time.”

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