Most insurers rely on external guidance to help them map out information technology strategies. Over the years, they've derived such support from vendors, consultants, analysts and even state and national associations-all of whom possess a unique role in the grand scheme of IT strategizing.But a fledgling group that's touting itself as an "IT advisory and research firm" for property/casualty insurers is providing yet another alternative. The question is: Will P&C carriers embrace the concept widely enough to enable it to succeed?
In June, Toronto-based Insurance Technology Group (ITG) was unveiled with a mission to improve the cost-effectiveness of IT decision-making for property/casualty insurers.
The organization's founders believe ITG can accomplish this by providing relevant and objective intelligence on vendor-specific applications, enterprise systems and operational practices.
Seeking to recruit senior-level executives, particularly CIOs, within U.S.-based property/casualty companies, ITG has so far signed two members, and is hoping to have six insurers in the fold in time for its first member conference, scheduled for late fall, says Andreja Bozovic, one of ITG's managing directors.
The charter-member insurers, who were not identified, have annual premiums of $400 million and $625 million, respectively. ITG has identified 400 P&C insurers in the United States that might see value in its model.
Targeting insurers with annual premiums in the $250 million to $2 billion range, ITG hopes to recruit 60 insurers as members within the first three years, says Bozovic.
For a nominal fee to join the group-fees are uniform for all ITG members regardless of their size-insurers first join ITG and then become part of the group's Insurance Technology Board (ITB).
As an ITB member, insurers participate in the formulation of IT policy development, which will mainly revolve around pressing IT issues of the day.
"To support business-critical decisions, many CIOs of mid-sized insurance companies can't get their hands on technology intelligence that's sufficiently reliable, impartial and affordable," says Marek Jakubik, a managing director of ITG. "The pressure to deliver is always there, but there's seldom enough time and never enough money."
Adds Bozovic: "It's been a struggle to bridge the gap between business and technology-building closer, non-antagonistic ties between business and IT, and more focus on how technology issues should be discussed in executive board rooms. Being a CIO is a complex job these days. Our main goal is to make CIOs more successful by delivering technology intelligence."
Point of difference
As it moves to establish a constituency, questions loom about what ITG can offer P&C insurers that other industry affiliates cannot. This is what prospective insurer-members will have to determine as they closely examine the benefits of membership.
Although the cost of joining is nominal, insurers might be skeptical about what ITG can do for their IT fortunes. And because the model is so unique, insurers can't effectively benchmark ITG against similar groups.
On the other hand, because ITG is so unique, it may generate interest in membership, ITG principals say.
"Based on the competitive nature of the industry, there is only so much insurers can share," says Susan Cournoyer, principal analyst at Gartner Inc., Stamford, Conn. "But ITB can be successful because it symbolizes a new, tactical approach to IT. It's not the classic advisory model."
There is also another distinction of the ITG model: Consultants and vendors don't always deliver on what they promise, Bozovic contends.
"The research provided by some industry analysts can be what I call 'a mile wide and a foot deep'-they try to service everyone," he says.
"And hiring consultants, as many insurers realize, can cost an arm and a leg. Our model provides in-depth and objective research, while enabling members to network within an exclusive peer environment. By our estimation, it will cost our members one-fifth of what they could expect to pay in management consulting fees."
ITG is not looking to criticize the services rendered by consultants and vendors, according to the principals. Instead, it's eager to tout its own competencies. Of the group's three principals, two have mathematical and statistical backgrounds.
With more than 25 years of senior management and consulting experience in the IT industry in North America and Europe, Bozovic has accumulated experience in information engineering, business systems modeling and planning in industry verticals such as financial services and manufacturing.
He has also developed expertise in product marketing and management of enterprise software solutions for the financial services industry.
Prior to founding ITG, Bozovic was director of marketing with Toronto-based Castek, a technology provider for the P&C market.
Jakubik's experience spans business sectors such as insurance. In the mid- to late-1990s, he held positions as CIO of Zurich Financial Services Group and of Pitney Bowes Canada.
A third partner, Vladimir Orovic, has developed expertise in enterprise technology management and application integration, large-scale transaction processing systems, as well as e-business and customer relationship management strategies and architectures.
How it works
As it builds a membership coalition, ITG plans to take input from members to develop expert studies. With the studies completed, the group then plans to hold conferences and roundtable discussions of these key issues.
The expert studies will contain industry intelligence on member-selected topics and areas of interest; in-depth comparative analysis of solutions and practices; practical, hands-on testing and due diligence; and qualitative assessments by industry experts, according to ITG.
The group plans to organize and host two member conferences per year, with each consisting of presentations and elaboration on the expert studies.
To ensure that the membership is pristine, ITG members are exclusively drawn from the insurer ranks. The group also does not plan to sell any of its resources to non-members, and vows that it has no other financial relationships, affiliations or agendas, says Bozovic.
When topics are selected, ITG will conduct research through what Jakubik calls "very stringent methodology" and the findings will be fairly complex.
"We will produce four studies a year based on the topics that the board selects," he says. "The conferences we sponsor will serve as the forum for discussion. It will provide a chance to capture undivided attention of the group members."
The group is expecting to package two expert studies every six months, and can complete a study in about four months. "We can reduce the cost associated with gaining access to that intelligence by allowing members to share that cost. And ITB reduces the risk by ensuring the soundness and impartiality of the intelligence," Bozovic says.
After performing due diligence, the two charter members of the group opted to join ITG because they recognized the upside that the model provided. One of the insurer members informed the group that it wants to integrate middleware into its IT infrastructure and is also in the market for a dynamic automated underwriting engine and rating and billing solutions.
It will be interesting to see how much qualitative feedback ITG can consistently generate from its members, particularly because insurers aren't often forthcoming with information that could be considered proprietary in scope. To discuss topics from a "surface" standpoint would defeat the purpose of the group's establishment.
Despite this concern, both Bozovic and Jakubik say they are confident that the members they will eventually recruit will provide the level of insight that can yield compelling solutions and promote best-practices IT deployment for the future.
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