As the economic roller coaster continues, insurers, as a whole, have weathered the storm extraordinarily well. Though there certainly have been casualties, compared to banking and securities firms, insurance companies have fared far better. Nevertheless, publicly traded insurers have seen share prices - and market values - decimated, only to be revived by solid earnings. The uncertainty has resulted in many of the crown jewels of the AIG empire going unsold for long periods, only to be sold at relatively low prices. Surprisingly, one thing that hasn't happened is a slowdown in core systems projects (policy administration, billing and/or claims). Aside from life insurers with large investment losses, few carriers are delaying or canceling core systems replacements. In fact, the market for policy admin systems in 2008-2009 has shown virtually no net slowdown from 2007 to 2008, which was the strongest year on record for core systems sales. In an industry with a history of cutting IT in lockstep with a down market, what's different this time? The answer falls into three categories: differences in attitudes toward IT, differences in the available core systems solutions and differences in the competitive landscape.
Until recently, many carriers viewed IT as nothing more than a cost center: a support function that kept the business running, but added little real business value. In the last few years, however, IT and the business side have done far more partnering, resulting in the business relying on IT to enable its projects and processes, and IT relying on the business to better communicate needs and define where projects are needed. This has led to greater value creation by IT and a better understanding by the business of the value created by IT. IT is no longer viewed as an easy place to start cutting when things get rough.
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