What shall we say about this year that is about to expire?
When it comes to technology in the insurance space, the rule of thumb has always been to stay far behind the bleeding-edge wave and proceed with great caution, based on the success or damage observed. I suppose we can take some comfort in the thought that in 2010, the rule has been obeyed in spades. Why is that comforting? Because, as we all know, the insurance industry loses its lunch over the idea of taking a risk, and while that may frustrate propeller-heads like me, it is what has kept the industry from plunging to the depths when events like the dot-com bust hit.
As previously noted here, spending on IT across industries in general is expected to rise modestly in 2011, but in very few places do we see organizations dedicating additional funds to hiring back full-time workers. To me, that indicates the all kinds of organizations lack confidence in the alleged economic recovery. Our industry in particular continues to see layoffs, while IT shortfalls are likely to be covered through giving additional hours to existing personnel or via outsourcing, rather than local hiring.
When the economic bomb dropped on the insurance industry (and everywhere else) in 2008, we scrambled into our secure bunkers for safety from the attack and to avoid the fallout. This is where most in our industry now find themselves, peering nervously out of their concrete strongholds and waiting, as they always do, for the radiation count to drop to zero before they emerge and pull their wallets out of their pockets.
The emphasis during 2010, not surprisingly, was on “doing more with less.” Nevertheless, insurers are smart enough to know that they must remain competitive and that they must be prepared for the recovery when it actually happens. When carriers peer out of their bunkers, however, they can easily see that their competitors, for the most part, are doing very little technologically on the competition front. Most are simply not willing to risk a significant IT investment, especially when their rivals are obviously not doing so. As a result, just treading water has been sufficient for carriers to maintain their competitive status in 2010.
Certainly, there has been much talk in insurance circles about forward-looking initiatives, such as leveraging social media for marketing purposes. What gets lost amid the talk, however, is that such efforts really don’t cost a lot of money. Of course—as also documented here—social media sites are risky places to be, so insurers are again being very careful in dipping their toes in this particular swimming pool.
In summary, 2010 has not been a year in which we saw anything like technological mojo among insurance enterprises. On the positive side, however, the industry has leveraged its cautious character to remain relatively stable and strong in troubled times, especially when compared with other industries.
Will 2011 be different? Stay tuned for the official guru forecast next time.
Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.
Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at firstname.lastname@example.org.
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