Ernst & Young just issued its strategic overview of the P&C insurance technology environment in the year ahead and, predictably, IT will be playing an ever-greater role in companies' growth. However, look to specific technologies. INN's Bob Violino provides an overview of EY's projections, but it's worth taking a deeper dive into EY's thinking.
EY anticipates more pressure on the industry over the coming year from greater competition, ever-more-fickle consumers and increased regulation. Success in the insurance industry in 2014 comes down to two words, the report's authors’ state: cloud and analytics. But is that all there is?
First, EY talks about how the role of technology needs to be broadened to affect transformation across all the business lines with a P&C carrier. “A rare opportunity exists to broadly transform technology, replacing core engines with fully integrated, cost-effective cloud-based systems for distribution, underwriting, product development and claims,” EY says. Investing in cloud-based approaches to core insurance systems will help reduce operating costs, increase data access and improve speed to market.
The availability of cloud-based solutions — both from third-party sites, as well as internal private cloud initiatives — will help a great deal in reducing development time and the need for upgrades. It also provides access to best practices that cloud providers have gradually baked into their solutions. But many companies running their own data centers need to approach this opportunity in a gradual, deliberate fashion. Switching over to cloud for cloud's sake from a well-functioning, on-premises system just wouldn't make sense, and is a path fraught with issues.
On the data analytics side, EY urges organizations to take good care of their data assets, and establish a strategy and architecture that will enable faster and more-relevant analysis. Good advice. EY goes on to suggest an action plan with five key areas in which this can be made to happen:
1. Establish “enterprise intelligence” through common standards and policies under a common architecture. Important data no longer just comes out of the central relational database — it will come from many sources, such as sensors and social media.
2. Put “enhanced analytics” in place that can capture data from all sources and turn it into information that's relevant to the business.
3. Make greater use of predictive analytics from this data, which will serve many parts of the organization, from fraud detection to underwriting to product development.
4. Put data governance in place. Data only can be turned into something of value if the business has full faith and trust in it. Cross-enterprise committees, centers of excellence or the appointment of data stewards will help make sure everyone understands and can benefit from the data that is available.
5. Ensure data security. Data is the most critical asset any organization can have, and it is the very foundation of anything insurance companies have to offer the market. Invest in best practices and technology to protect it.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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