When it comes to information technology investments in the insurance industry, there is a clear delineation of priorities predicated on the sector of business in which a carrier operates.Underwriting, pricing and products are the most important IT priorities for property/casualty insurers, while distribution reigns supreme for life insurers, states Tillinghast-Towers Perrin's e-Track report on insurance technology investments, which polled 248 large and mid-size carriers across North America.
It's become essential for life insurers to recruit the proper distributors that can scout for new prospects, says Jenny Emery, global e-business leader for Tillinghast Towers Perrin. As such, there will be a premium placed on technology solutions that enhance distribution.
For example, buying a home or a car are trigger events-most homeowners and car-buyers will inevitably acquire insurance. However, not all life insurance prospects are cognizant of their investment needs and must be prodded into buying coverage.
"There is a whole under-penetrated middle market to tap into on the life insurance side," Emery explains. "Life carriers can't get to this audience without the right distribution strategy. It's a huge prospective market if it can be penetrated, so that's why distribution technology is a high priority."
Distribution technology is not as crucial to property and casualty carriers because these products don't require specialists in which to market them.
Controlling loss ratio is a priority for both life/health and property/casualty carriers, therefore underwriting technology will be important. But there are slight variations, Emery says. Life carriers have placed an emphasis on developing automated underwriting, while property/casualty carriers have reported making progress in "accessing new sources of data for underwriting and pricing."
The reason is that property/casualty insurers are exposed to more bad risks, and need to weed them out, Emery adds. "So to improve their loss ratios, they have established links with credit bureaus that can provide them with the credit histories of potential customers," she says. "While this slows down the process internally, it's essential for a personal auto carrier to be able to generate data on potential bad risks."
Claims management solutions for property/casualty insurers are also regarded as more of a priority than they are for life carriers, who responded that financial management solutions holds sway, Tillinghast notes.
The type of coverage that a carrier markets is indicative of how much emphasis they place on "owning" customer data, Tillinghast discovered. Health providers, for example, are nearly unanimous (94%) in the belief that it's imperative to own customer data, while life and property and casualty carriers placed greater emphasis on creating profitable business partnerships.
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