Considering the insurance industry's adoption of current or emerging technologies, a scene from the movie 2001: A Space Odyssey comes to mind. I remember a scene with a group of our earliest ancestors sitting around grunting and grooming when suddenly a large, polished black obelisk appears.Mayhem quickly ensues. The apes quickly get excited, sniffing and tentatively touching the object, jumping around and exercising their vocal cords.
I've always thought of the obelisk as emerging technology that has been thrown abruptly into a society-or into an industry such as insurance-that has no idea what to do with it.
Of course, it's not a matter of using the latest or greatest technology. Like other industries, ours must balance the two objectives of decelerating costs and accelerating revenue. The second must not be sacrificed to inertia, what's easiest, or to aversion to risk.
Five Competitive Capabilities
Are insurers moving quickly enough to achieve both cost and revenue goals? Consider your answers to these five questions about your capabilities:
* Are you streamlining processes? This meets traditional cost focus but could enable increased revenue.
* Are you providing world-class service to clients, agents, brokers, claimants and other stakeholders? This meets both cost and revenue goals.
* Are you increasing speed-to-market of new or enhanced products and services? This meets revenue goals.
* Are you establishing robust content management and collaboration portals for employees, producers and, where applicable, clients? This meets revenue goals and, to some an extent, cost objectives.
* Are you establishing scalability for future growth? This meets both short and longer-term revenue goals.
If the competitive mix consisted only of insurers moving at the same pace, then slowness to adopt technology might be sufficient. But if even one insurer is quicker to adopt technology, or if banks or investment firms meet the capabilities I've listed, then slow-moving insurers could become road kill.
At the end of the day, insurers still have to identify and manage risk profitably while administering the business on the books. And issues such as cultural change will always be in play for any insurer striving to accomplish these five capabilities.
However, in this brave new interconnected, information-intensive world, insurers must find their own obelisk: the current and emerging technologies that will strengthen their value proposition, deliver world-class service and provide an experience for their clients and producers that truly distinguishes them from their competitors.
The truth as to whether insurers are moving at the right speed will be found in their changing market share, profitability and the satisfaction of their clients and producers.
Barry Rabkin is senior research analyst, insurance at Financial Insights, an IDC Company based in Framingham, Mass.
