Charleston, S.C. — The demand for integrated services, coupled with the continued rise in merger and acquisition activity, serves as a stark reminder for carriers and vendors alike that are realizing they need the tools and techniques that will foster partner and alliance success. This was made evident last Thursday in Charleston, S.C., at an IASA-sponsored vendor alliance, where more than 70 attendees proved they had a vested interest in the subject.
The session provided three perspectives: analyst/consultant, insurance carrier and service provider, and offered insight into results of a vendor survey IASA conducted earlier this year.
Rod Travers, SVP, Robert E. Nolan Co., Dallas, who joined a panel discussion with Trae Jones, VP of McLean, Va.-based Appix Inc., an ATSC company that offers consulting services, offered the vendors in the audience some background on carrier requirements.
“This is really about carriers’ demand for total solutions,” Travers said. “It also reflects the idea that although insurance technology buyers are becoming more accustomed to alliances, that doesn’t mean they are necessarily alliance-savvy.”
Travers and Jones agreed on the importance of references as a way for vendors to create solid, success-focused relationships with complementary solution providers, as well as financial stability, reputation and working style.
“Focus on the alliance’s purpose, not its ritual,” Travers said. “Because if you just go through the motions, this is a small industry, and buyers talk to their peers.”
Jones told the group that although many partnerships and alliances succeed, there is much to be learned from those that fail.
“It can be compared to a marriage,” Jones said, “and even marriages with the best intentions, have more than a 50% chance of failing.”
Jones spoke of relationship overload, financial constraints, personality clashes and breakdowns of communication as primary reasons for alliance (and marriage) failure.
“It’s a risk, and it requires dedication to a shared goal—meeting the customer’s requirements,” he said.
Mike Sciole, CIO of IFG Cos. (Burlington Insurance/Guilford Specialty), Burlington, N.C., told the group that, from an insurer’s perspective, alliances between vendors are hard to follow. “Trying to track M&A activities has become futile,” he said. “My company looks at the leadership formed as a result of an M&A, such as which one of the two will take over, how it will affect service levels in my contract, etc. But the most important thing is domain expertise. Does this newly formed company have it?”
Establishing domain expertise is a straightforward initiative, added Sciole. “I leave the ‘sexy’ initiatives and buzzwords alone. The most important thing to me is how you will deliver on your promise. You need to keep it simple.”
Piyush Singh, CIO of Great American Cos., Cincinnati, noted that the backdrop for the discussion centered on the idea that people believe IT is the biggest inhibitor. “We are a risk-aversive industry, and big changes are hard to take.”
He offered the example of one insurance company that currently has 50% of its policy admin system still in assembly code.
“And they are happy with that,” he said.
“It’s mother and apple pie,” Singh added. “When you are working with us, keep it simple, make our time together efficient and effective. Look at the long-term relationship and keep it business-solution focused, because IT is an enabler from a strategies perspective.”
Telling the audience that there is no silver bul et to the successful alliance between solution provider and carrier, Singh admitted that insurers are not perfect, either. “When there is finger-pointing going on, it’s not just the vendor community to blame,” he said. “We can have horrible project managers, too.”
Sciole agreed. “Remember, we also are held accountable,” he told the vendors in the audience. “IFG tends to put as much in the contract as possible, because if you articulate up front, you determine who is responsible for what, making expectations clear.”
Both carrier representatives offered tools and techniques that they believe help foster the alliance and set course for a successful and production long-term relationship.
For example, Great American invites vendors to their offices for a one-day seminar. “Everyone needs to understand the larger ecosystem of our company,” Singh pointed out, “and this gives them knowledge about who we are, our goals, how we work and a good understanding of the entire industry.”
IFG follows a similar format. “I put people from my staff, the vendor and the business side in a room and make them figure it out,” Sciole said. “They must determine how long the project will take, and identify the things that are attainable as well as those that are not.”
Sciole admits that it’s a time-consuming process. “I allow three to four months for contract negotiations, but you want to do it right.”
Source: IASA Vendor Alliance meeting, Charleston, S.C.
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