One of the more interesting aspects of attending insurance industry trade shows is to listen to the themes that software vendors are stressing to carrier executives. Software companies insist they listen to customers to better understand their current needs, enabling vendors to develop products and services that the market is demanding.Having said that, I find it somewhat peculiar that three of the overarching themes I heard from vendors at the recent LOMA Systems Forum are themes from the past: carriers need to stick with CRM; carriers should implement best-of-breed technology; and, carriers should consider outsourcing technology and business processes.
At first, I was skeptical. Insurance executives, I thought, would see right through these recycled pitches and conclude that software vendors have run out of fresh ideas. Indeed, one industry expert who worked for 15 years at a prominent mutual carrier, told me that many of the concepts and case studies presented at the show were the same that she heard 10 years ago.
But the more people I talked to, the more I was convinced that for the most part, software vendors do have a good pulse on how technology can enable carriers to improve their top and bottom lines. I confronted several well-known CRM vendors and repeated what many industry experts have been saying for the past year: CRM has been a big failure and carriers are not willing to spend big bucks on CRM solutions. The response I got was universal: Yes, enterprisewide CRM has not delivered the financial results that carriers had expected, but what many leading insurers are now doing is scaling down their CRM initiatives and implementing them on a smaller scale.
I was also surprised by the number of LOMA exhibitors who stressed outsourcing options. If technology providers truly are offering products and services that carriers are demanding, then expect to see a major shift during the next five years to outsourcing on the scale that the banking industry accomplished more than a decade ago. Indeed, this issue's lead story, "Let's Make A Deal," details how many insurance companies are now investigating business process outsourcing, such as human resources and contact centers, as well as outsourcing core processes, such as policy administration and claims processing.
Insurance executives for years have dismissed outsourcing because they feared losing control of processes-and critical customer information. But as more insurers offload both technology and business functions-and generate measurable cost-saving-the industry's well-known "herd" mentality surely will kick in and outsourcing will become standard practice.
I don't have a clear explanation for the renewed emphasis on the best-of-breed approach to purchasing and implementing technology other than the development of Web services and the refinement of XML have made it much easier to integrate various applications. Be sure to read this issue's story on Web services, "Double Indemnity," to learn how a growing number of carriers are using Web services to enable systems to work together with far fewer interfaces and supporting the belief that carriers may indeed by able to implement "best-of-breed" technology.
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