In my last blog entry, I noted that the industry should be applauded for looking to technology in 2011 for operations solutions that will help companies maintain competitive position. I also pointed out, however, that technology doesn’t deliver magic results with the wave of a wand.
Year-end figures from 2011 point to a very tough year ahead for P&C carriers in particular, with more insurable events having put a strain on carrier resources that are already thin due to the weak economy. With that reality as the backdrop, insurers will want—more than ever—to take any and all steps necessary to keep their current customers and, secondarily, to attract new blood. Ours is a waiting game. Sooner or later this economic pain will end, and when that happens we must be prepared to jump on any and all opportunities to build profitability.
In the meantime, however, we need to forge ahead into 2012 and to make the best of the lousy hand that fate has dealt us. Vendors claim their technology products and services will deliver efficiency, enhance sales, and the much coveted ROI. Small wonder, then, that beleaguered insurers are taking a close look at what the tech marketplace has to offer.
At the moment, technologies that deliver significant ROI are highly sought after by the insurance community. The problem, however, is that most of these products and services will not show immediate financial returns. This is not because they can’t deliver as promised. It is very much because major technology shifts in particular take a long time to be implemented—not to mention the time and due diligence needed to investigate solutions before they are purchased. Oh, and those great tech products may also carry a heavy price tag.
In the case of policy admin systems—the most popular replacement/upgrade for insurers over the past several years—the IT project could run anywhere from 18 months to five years. And while some benefits may accrue early, an insurer really can’t expect to see the full ROI until the technology is up and running. As a result, even the magical technology fix may not provide enough upside to make taking a risk now a wise move.
My sense is that we will see a continuation of smaller scale money-saving moves in 2012. Security upgrades should be appealing, because they can often be done quickly and because they provide a certain sense of comfort in a very uncomfortable virtual world. Upgrades that address wireless security concerns should also drive acquisition and use of wireless technologies in the coming year. Better security will also make insurers less nervous about the cloud, which is a cost-saver.
Customer-facing technologies that increase retention and keep up the communication between insurer and insured will also be a must. While there is a delicate balance between automating customer service and providing human interaction, it may well be that for many customers and potential customers (principally younger ones), cooler technology interfaces will help improve loyalty.
Overall, insurers will be technology buyers in 2012, but they will be looking for value over everything else. Vendors should take note.
Dear Readers: This is my final editorial blog posting for Insurance Networking News, and I wanted to take a moment to thank that fine publication for its kindness and support. Please feel free to visit my web site (www.aratremblytechnology.com) to find our when and where you can access my questionable wit and wisdom in future. Meanwhile, thank you all for reading! See you soon!
Editor’s note: While, this is the last Return of the Guru editorial blog, you’ll be able to keep up with Ara as he contributes to support upcoming projects produced by SourceMedia’s custom publishing department.
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