An alarmingly high number of insurance companies still have not crafted a cogent e-business strategy, with many projecting that it may take two to three years before their e-business programs are fully operational.This prediction was revealed during KPMG LLP's 12th annual insurance industry conference, held recently in New York.
In a live electronic survey of 175 senior insurance executives attending the conference, KPMG generated insights from large and small carriers.
When queried about several mainstream operational strategies, many senior insurance executives said they would be aggressive in the face of rising competition. For example, 30% stated that as insurance-industry merger and acquisition activity perks up, they plan to position their companies as "acquirers," while 15% will position their companies "to be acquired."
However, when queried about e-business strategies, executives were not as proactive. Of the executives polled, 40% stated that in sizing up various threats to e-business initiatives, a lack of a clear strategic vision is the biggest culprit. More troubling, 36% indicated that due to their lack of vision, it may take them three years to implement a fully transactional e-business strategy-defined as connecting back-end databases to the Web.
Furthermore, 31% of executives said it would take their companies two years to become fully transactional, while 15% said this would be accomplished in the next year.
"There may have been several reasons for lacking an e-business vision, with budgetary hurdles serving as one of the key reasons," says Christopher Swift, national industry director for New York-based KPMG's insurance practice.
"But for the carriers that say it will take three years to develop fully transactional Web sites, I'm afraid many will be left in the dust by the competition."
A lack of vision isn't the only obstacle hampering carriers' efforts to implement e-business strategies. In the survey, 14% of the executives indicated that a lack of investment hindered these activities. Another threat to a successful e-business program involves a lack of skill, which 26% cited.
Within the context of the survey, a lack of vision, says Swift, may be best defined by the way carriers approach demographic marketing. A significant number-51%-stated that they have a high degree of preparedness in serving the needs of baby boomers, who are reaching middle age.
However, only 17% of carriers polled are prepared to serve so-called Generation Y consumers, who are in their 20s.
The threat to carriers is that competitors will be more than ready to fill this void. According to the KPMG survey, most executives expect the most formidable competition to come from financial services companies. Of all competitors, 53% of the executives polled regard their companies as being "even with the competition," while 30% say they are significantly behind.
But Swift says all is not lost for these laggards. "The carriers that are behind the competition with their e-business plans might be in good shape," he says. "They haven't expended significant capital to build an e-business infrastructure. Because they skipped the first-generation phase of IT, this means they don't have to worry about retrofitting technology onto an existing platform. They should have the capital to spend."
The poll encompassed all lines of insurance, with participation from carriers such as Metlife Inc., Prudential Insurance Co. of America, Kemper Insurance Cos. and Nationwide Insurance Co.
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