Attendees at Property Casualty Insurers Association of America’s Information Technology Conference got a sneak peak at Novarica’s 2013 IT budget research set to be released this month. And, what they saw is a bit different from 2012.
“This is a time of incredible change, a time when information technology is really moving center stage,” said presenter and Novarica Partner and Managing Director Matthew Josefowicz.“It is extremely critical across the economy but especially in information businesses like insurance. And the challenge is we’re in a world of rapidly increasing complexity and rapidly decreasing user patience, and it’s up to IT to bridge this gap.”
It starts with data, Josefowicz said, and insurers are planning to invest in this in 2013. “It used to be that insurers could compete on knowing more than their competitors,” he said. “They’d actually find out information their competitors didn’t know. This is becoming not possible. Everyone can buy the same information. “What companies have to do is out-analyze that data, out-smart the competitors in that data, but it’s not possible to know more than the competitors.”
BI and data is the top priority for P&C insurers among insurers top three business capability priorities for 2013, according to Novarica’s not-yet-released “US Insurer Budgets and Projects for 2013” report. For large P&C insurers (more than $1 billion in premium) it is the No. 1 priority. For P&C insurers with under $1 billion in premium, it’s No. 2.
These insurers currently, or plan to, apply data and analytical capabilities to a number of areas. For large insurers, the most common use will be to drive frequency and severity prediction, loss reserving, detecting unknown patterns of fraud. Other insurers will also use it for frequency and severity prediction and loss reserving, but third on the list is premium audit.
Ease of doing business for distributors and customers, speed to market and reducing operating expenses are also near the top of the list for insurers. And, of course core system replacements and enhancements continue in 2013; 30 percent of P&C insurers are working on a core policy admin systems replacement in 2013. The areas seeing major enhancements are BI repository and reporting and customer and agent portals.
Josefowicz also touched on a previous Novarica that showed IT staff development becoming more important, especially in mobile development and business analysis. “One thing we found interesting was requirements and user story and business case development showed up very high in terms of skills that in terms of insurer IT groups that feel understaffed in.”
Josefowicz concluded the session with a number of thoughts on the role of IT in insurance organizations. “You cannot run a company today without effective information/communication technology. It’s just not possible,” he said. “The primary challenge of insurer IT groups is not to build or maintain systems, it is to enable business capabilities through technology. That means working hand-in-hand with business leaders, with organizational planning, with corporate strategy, making them aware of what’s possible, the costs and the restrictions of the things they may be considering.”
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