Insurance executives have a lot on their minds these days, the top issue being increasing financial pressures that, like a vice grip, are squeezing insurers' profits. As insurance executives prepare their 2003 budgets, and search for ways to reduce spending, industry experts warn that they should be wary about cutting technology spending.Granted, the days of throwing mounds of money at new technology projects are over, not just in this industry but across Corporate America-as well it should be. In many cases, technology was oversold as the cure-all for carriers' inefficiencies. As a result, carriers have become more skeptical about promises made to them about the benefits of new technologies. But, fortunately, skepticism hasn't prevented insurance executives from investigating how technologies can support their business strategies.
Instead, carriers are demanding from suppliers hard information that quantifies how much a certain technology will improve efficiencies or lower costs, and how quickly their technology investments will pay off-excellent questions that demand accurate replies from technology suppliers. For their part, most technology companies appear to be listening to carriers' queries, and, when possible, are providing tangible ROI data.
I would encourage you to carefully read Kimberly Harris' article, "Carriers IT Spending Remains Robust," which begins on page 32. "Traditional strategies and processes will not be successful in this transforming market," Harris writes. "Some insurers are, in fact, breaking out of the traditional mold, reinventing business processes and strategies to match consumers' demands for speed, efficiency and service. The key to achieving these goals is information technology."
Carriers "IT investments must be smart and strategic, however, and must closely match their business needs and strategies," she adds. "An insurer that makes the right IT choices will be well positioned to accomplish its business goals. Those that do not risk being left behind in an intensely competitive marketplace."
