There’s a time-tested axiom in the medical world that goes something like this: Ask a surgeon for a cure for what ails you and he’ll recommend surgery; ask an internist and he’ll prescribe medicine; ask a psychiatrist and he’ll say it’s all in your head. I’m sure you get the idea.

When we ask for help with a problem, the proposed solution will often depend on the training and talents of the person you ask. So, when you ask an information technology person about a business problem, the solution is very likely to center on technology.  

And why not? The insurance industry in particular has benefited by technology ever since it started using mainframe computers some 40 years ago. Given that history, it is no surprise that insurers would look to technology to solve current problems that may be rooted in a weak economy and/or a tightening market.  

Technology is—and has been—a blessing, but before we go to that well too often, we also need to realize that it is not the answer to every problem, and it does not obviate the need for common business sense. For example, at the beginning of this decade, customer relationship management (CRM) technology was all the rage in insurance circles, with carriers falling over each other trying to get systems implemented in order to gain the fiercely desired competitive advantage over their rivals.  

As you may know, CRM was—on balance—a colossal flop in our industry, primarily because management believed it could just heave the technology over the fence to IT, who would then work some magic that would enhance relationships with a carrier’s most important customers. The failure of high-level executives to make the structural and cultural changes that would support CRM ended up deep-sixing what was essentially a sound business doctrine—concentrating on one’s most profitable customers.  

Another example comes from my good friend Jim Picerno, editor of The Capital Spectator. Speaking of technology’s role in providing information for investors, he wrote recently that, “technology by itself doesn't automatically elevate returns.” He noted that one reason for this is that the same information is available to many other people.

“Fighting a war with nuclear weapons, so to speak, is a clear advantage if your enemy is using bow and arrow,” said Picerno. “But if everyone has a large supply of ICBMs, the game is something of a standoff.”  

Taking this back to the insurance industry, it is my belief that we are fast approaching a time when most insurers will be utilizing some form of state-of-the-art technology in their systems.  The continued strong market in modern policy administration systems is indicative of this trend. Thus, any gain in competitive position from technology will likely be negated by the fact that one’s competitors will be using the “nuclear option” as well.  

If technology doesn’t give us the winning edge, then what will? I suggest it is the same thing that has always given winning companies the edge—well thought-out business practices that maximize the benefits of technology, but don’t depend on it totally. The key will not be so much which technology a carrier or broker or agent uses, but how the technology is used in the larger context of the firm’s best interests.   

In the end, the firms that embrace the best business practices will win. Those who lean too heavily on technology and ignore those best practices are indeed at a competitive disadvantage.

Ara C. Trembly ( is the founder of Ara Trembly, The Tech Consultant and a longtime observer of technology in insurance and financial services. He can be reached at

The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia.

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