Project management software won't increase a carrier's market share or revenue streams, and it won't improve system integration. But the impact it can have on an IT department's bottom line can be as significant as the ROI claimed by some of the more trendy technology tools carriers are implementing.

Ten years ago, telecommunications costs were typically the 14th or 15th line item for insurance companies, says Johnny Podrovitz, CEO of MSS Group Inc., Castle Rock, Colo. "Now, they're the third or fourth."

When Farmers Insurance Group conducted testing on a Web-based customer self-service program, the Los Angeles- based property/casualty insurer considered implementing a capability that would enable customers to make changes to their policies.Farmers executives recognized the value of self-service capabilities. After all, enabling a customer to instantaneously make a change to their auto or homeowners policy represents the spirit of customer self-service. But earlier this year, as Farmers executives examined the concept further, they uncovered a flaw with the concept: Giving customer unfettered access to make changes was considered an affront to Farmers' agents.

With their backs against the wall to stimulate profits and revenues in the face of poor economic times, senior-level executives in insurance companies are turning to their chief information officers to breathe new life into their static operations.As IT spending begins to inch upward-industrywide expenditures are projected to increase gradually each year, peaking at about 7% by 2007-industry experts believe it's incumbent upon CIOs to capitalize on the additional dollars they'll have at their disposal. Having learned from experience, CIOs indicate they are poised to reach a higher level of IT spending stewardship, with many pledging to convert IT from what is now regarded as an art into a science.

Most insurers rely on external guidance to help them map out information technology strategies. Over the years, they've derived such support from vendors, consultants, analysts and even state and national associations-all of whom possess a unique role in the grand scheme of IT strategizing.But a fledgling group that's touting itself as an "IT advisory and research firm" for property/casualty insurers is providing yet another alternative. The question is: Will P&C carriers embrace the concept widely enough to enable it to succeed?

A study released in June by Giga Research, an operating unit of Cambridge, Mass.-based Forrester Research Inc., provides insights into specific spending areas that CIOs presently value.The study, "Improving Business and IT Efficiency," culled insights from 10 CIOs across the United States and Canada in the property-casualty, life/health and specialty insurance industries.

At the recent ACORD technology conference, keynote speaker Larry Downes offered a theory that information technology spending shouldn't be curtailed just because operating conditions are poor.Downes, a technology strategist, noted that technology should not be perceived "as an obstacle within a business," adding that insurers "can't save their way to success" by scaling back on IT investments.

As legacy applications move through their life cycle, they frequently evolve from assets that manage key processes and information to liabilities that drain time and resources. As a result, these applications become increasingly more difficult to maintain.At the point when an organization's legacy assets no longer serve its goals for financial management, customer intimacy, regulatory compliance, and operational effectiveness, management must decide whether to rebuild key systems, replace them with third-party applications, or modernize aging applications to extend their useful life.

Michael Galvin knows more about disaster recovery and business continuity than most of us care to know. That's because the vice president and chief infrastructure officer of Empire Blue Cross and Blue Shield has first-hand experience with the worst catastrophe this country has ever endured: September 11, 2001.The New York-based health insurance company occupied 10 floors and 480,000 square feet in the North Tower of the World Trade Center. And, although the company tragically lost 11 people that day and several employees were injured, most of the 1,900 employees and consultants escaped from the building unharmed.

Using Global Positioning Satellite (GPS) and cellular communications technology to gather information about when and where a motorist is driving, United Kingdom-based insurer Norwich Union is launching a pilot study this summer that could play a role in transforming the way auto insurers underwrite policies.Called "Pay As You Drive," the two-year study will involve retrofitting the cars of 5,000 Norwich Union policyholders with a "black box" that will gather and transmit vehicle and driving data to the insurer's back-end systems. Norwich Union statisticians will then analyze the data to determine which variables affect risk and claims, and those results will be used to calculate usage-based premiums.

At this time of economic and operational uncertainty, many global insurers are scurrying to identify-and then rectify-vulnerable components of their operations.In April, executives at Boston-based John Hancock Financial Services Inc. believe they made a key decision to help restore stability to the operation when the carrier inked a multi-year agreement to implement IBM Corp.'s e-business on-demand solution.

Already on the defensive about the use of credit scores for underwriting, property/casualty insurers now face another assault on one of their prime data tools in the nation's largest market for homeowners insurance.In late April, California Insurance Commissioner John Garamendi all but banned carriers' use of the main data source to underwrite and rate homeowners insurance policy. For 11 years, the Comprehensive Loss Underwriting Exchange (CLUE) has tracked claims on properties and property owners supplied by carriers of the nation's homeowners insurance policies.

Balboa Insurance Group Inc. needed to integrate its legacy-based customer data with an enterprisewide CRM system. Executives considered a costly systems conversion project, but opted for a middleware solution instead.Balboa Insurance Group Inc. faced a modern-day information technology conundrum. It had critical customer information locked away in its siloed host applications and couldn't get it out to support new Web-enabled business processes.

An increasing number of carriers are taking advantage of the cost savings of software development using geographically disparate teams, including those located offshore. And with good reason: the economic benefits of doing so can be exceptional.Most approaches to outsourced development are best-suited for traditional maintenance and system evolution projects in which requirements are static and well-documented. From my experience, these projects can run largely on autopilot and don't require a lot of structure and management time.

The potential savings for agents and carriers using real-time interfaces amounts to thousands of hours-and dollars-each day.A billing inquiry initiated through an agency management system takes two minutes, whereas the same inquiry takes eight minutes by phone, and nine minutes by carrier Web site. Those are the results of an agency workflow study conducted last year by Applied Systems Client Network (ASCnet), the user group for Applied Systems Inc., University Park, Ill.

Speed is an important call center objective for American National Insurance Co. because "shaving a minute here or 30 seconds there makes a big difference in costs when you're running a call center," explains Gary Kirkham, vice president and director of planning and support for the Galveston, Texas-based insurer.Yet, flexibility is at the core of the steps that guide customer service representatives (CSRs) through conversations with callers. A key to managing call center conversations resides in workflow-helping the CSR pace the conservation and guide it in the desired direction.

Outsouring isn't "news" to the insurance industry. Insurers have been using outsourcers for years for IT projects, such as application maintenance or development to help with legacy problems, small-scale business processes (such as using third-party administrators for claims processing or accounting) and out-tasking small parts but not an entire business process.However, the bulk of insurance outsourcing has tended to be within the IT outsourcing domain. Driven by aging legacy systems and limited resources (time, budget and staffing), insurers have turned to external services providers to help with a wide variety of IT initiatives, including infrastructure, networking, and application development and maintenance.

In an effort to reduce internal IT costs, more insurers are considering buying packaged software-as opposed to building customized applications.However, many executives in the industry-those evaluating packaged software solutions-may not be familiar with vendors and products that are available. Therefore, they may have difficulty assessing them.

When GE Capital announced to the world that it had saved $400 million in 1999 by applying six sigma principles throughout its organization, Marla Friedman listened.Then, as senior vice president of operations at Allstate Financial, she shared this impressive news with her boss Tom Wilson, the firm's president at the time.

The term "insurance card" is often equated with health insurance coverage, but a small and growing legion of insurers are issuing plastic to policyholders for more than just a doctor visit.Property and casualty insurers are finding advantages in dispensing branded stored-value debit and credit cards to customers for bigger ticket claims, particularly catastrophic homeowners claims.