We occasionally get comments from our readers, but none as intriguing as an email I recently received from John Horton.The industry sources that we interview typically are very opinionated and are open to sharing their beliefs. It's refreshing when readers who don't agree with those beliefs are willing to share their own opinions. And, to the benefit of the industry, I encourage our readers to send their comments to me at Frank.Cerne
Letter to the Editor:
It's been a long time since I had to refer to a dictionary to read a magazine article. (Richard) Roby's vocabulary usage in "The Business Context For IT Investments" (2001 Top Technologies, August) wasn't the only thing out of place.
His conclusion that insurance IT spending on administrative systems support is simply "policy processing" is incorrect. This industry's "processing" is very standardized and can hardly be less complex: We sell policies, issue them, bill and collect premiums, process requested changes and pay some claims. The true differentiation that we all deal with and spend so much money on is the care and handling of the products that we design, sell and administer.
As the market and management have driven our organizations toward the competitive advantage of product differentiation, we in IT have spent the last two decades coping with continual product design and redesign. Software vendors have tried in vain to keep their offerings current. However, (they) usually are not timely and are too generic.
Of all the insurance administrative systems that I am aware of, not one is capable of truly handling the vast array of products that are sold or administered. Therefore, an implementation of an off-the-shelf system for the past 15 to 20 years has consisted of spending dozens of person-years to customize. Thus, even standardized systems become unique to every company.
Most of us have implemented standardized systems where they truly fit (human resources, accounting/general ledger, claims handling, etc.). Policy administrative systems have and will remain expensive to implement and maintain until the marketplace compels us to evolve back to more commodity-like products. Only then will standardized systems once again become viable and cost beneficial.
Farm Bureau Financial Services
Des Moines, Iowa
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