Insurers that haven't started to integrate their diverse internal systems yet are facing what may be a slow and expensive process, says Brad Murphy, chief executive officer of DigitalEsp, an electronic commerce consulting company based in Raleigh, N.C."The insurance industry has not been an early adopter of new technology. Insurers have been early or late followers, acquiring technology slowly, only where needs are clearly documented," he says. As a result, insurers are filled with old, large systems that can be expensive to replace with integrated technology.

Murphy says one property/casualty insurance client with about $800 million in annual premium volume will spend $5 million to $10 million in system integration, just to deal with internal integration.

"Insurers have 40 years of accumulated stuff in their internal systems," he explains. "Unraveling all of the data contained in various silos can be a very slow process." Some insurers turn to enterprise application integration (EAI) vendors who install middleware that can link diverse systems through a common communications interface.

EAI may solve the problem of data integration, Murphy notes. But the underlying problems of unintegrated systems and siloed operations will remain.

Murphy recommends insurers begin the process of system integration with a comprehensive inventory of all their technology and a comprehensive analysis of its functionality.

"What does your technology portfolio look like? Do you know where all your company technology resides and how it is being used?" he asks.

Next, Murphy recommends an assessment of technology in relation to what you want it to do and how you want it to look to its users. He calls this process a "gap analysis."

"How does the technology relate to the interface used in communication of the information that resides in that technology? How does the technology relate to your business needs?" he says.

After comparing the technology portfolio to the company business needs, only then can you decide what you really need in terms of integration technology-either completely new systems or a common interface for existing systems.

Plan for the future, but don't plan too far into the future, Murphy adds. Planning too far ahead-and attempting to predict the pace of technological evolution- could land you back in the morass of unintegrated systems in very few years, he says.

"Look 36 months in advance, not much more," Murphy says. "Stay flexible."

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