Life insurance companies have the potential for significant enterprise value creation through more strategic emphasis on security initiatives, according to findings of a study released by Computer Sciences Corp. (CSC).
Entitled "Digital Trust for Life Project Report," the 18-month study, undertaken jointly with the American Council of Life Insurers (ACLI), addresses how carriers can better target their security investments to support growth and efficiency initiatives while also meeting compliance requirements.
The study examined the impact of a "digital trust," which refers to the trust IT fosters by improving the security and reliability of electronic transactions. Organizations that create digital trust position themselves for market gain through enhanced customer confidence, repeat business and referrals.
"Now more than ever, all parts of the enterprise, including IT security, must contribute real value to the organization without elevating information risk or jeopardizing compliance," said Ron Knode, the study's principal investigator and a director in CSC's Leading Edge Forum. "When executed correctly, a digital trust strategy can become a source of competitive advantage, and help insurers both grow their business and adhere to the inevitable tide of new regulations."
This examination of digital trust for life and annuity insurers found that while carriers have traditionally treated the security function as a cost center focused on compliance, there are opportunities for them to reap significant payoffs using the security function to create digital trust.
By shifting their focus to security as a "value creator" rather than "gatekeeper," and implementing proven digital trust principles and practices, carriers can increase revenue, raise productivity, enhance efficiency, improve sales conversion rates and gain new market access. Documented results of such measures range from 20% to 70% improvement.
The report recommends that insurers adopt a digital trust strategy, which requires changes in security organization, security team composition, IT risk governance and project definition, and offers two steps insurers can take now to start realizing benefits.
The steps, in summary, are first, alter the organizational IT risk governance model to include enterprise value creation as an objective; and second, apply a digital trust projection to existing system investments in order to extend their value.
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