As a result, insurers, agents and brokers are constantly finding themselves between a rock and a hard place when it comes to allocating funding for IT related activities. On one hand, enterprises must be responsive to immediate needs for priority efforts in marketing, customer service, process efficiency and customer retention. On the other hand, companies need to keep themselves in a competitive position so that once things get better, they can jump in and rake in the profits.
One immediate priority needs to be certain types of claims—and the fraud that goes with them. Rod Travers, EVP of Robert E. Nolan Co., points out in the company’s newsletter; “It’s no surprise that the soft economy brought an increase in certain types of claims and that fraud has risen.” He notes that worker’s comp is understandably coming under increased scrutiny, and suggests that IT can help alleviate the problem of increased fraud by delivering stronger claims automation and better analytics and fraud detection software.
There’s no question that he is right about this. The larger question, however, is how big a piece of the budget pie we devote to such problems brought on by the current crisis versus challenges that are sure to come when the economy eventually recovers. Part of the difficulty here is that no one can definitively say what “recovery” means.
If you listen to the Obama administration, we already are in recovery (never mind that unemployment remains at record levels and the real estate market is still in the dumper). Most of us in the real world, however, can see that things are still pretty bad for many of our citizens and for the world economy (anyone planning on doing business in Greece?). Every time some negative piece of far-flung financial news hits Wall Street, the markets react like 10 Mentos dropped into a bottle of Diet Coke, which is to say they literally and figuratively blow their tops.
Much depends, however, on where each of our companies draws the line in terms of economic recovery. We know we can’t simply ignore the future and not plan to have our enterprises be up-to-date and ready to handle business at what we hope will be normal levels again. We have to be ready in advance—but how far in advance?
Insurers and others who are keeping a watchful eye on the economy need to stay vigilant at all times and at all costs for what they see as meaningful signs of recovery. Being always vigilant is very stressful, but it is nonetheless necessary. It is no exaggeration to say that they will be betting a huge chunk of their IT budgets—and their futures—on how well they judge these changes.
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Ara C. Trembly is the founder of Ara Trembly, The Tech Consultant, and a noted speaker on and longtime observer of technology in insurance and financial services. He can be reached at ara@aratremblytechnology.com.
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