Policy admin, agent portals and business intelligence (BI) top insurers’ priority lists for 2011, all with a goal of improving business agility, insights and service quality, according Novarica’s 2nd annual “state of the industry” report.
For its report—“Insurance Information Technology 2011: Across the Core Systems Map”—the firm analyzed survey data of 122 insurers from the Novarica Insurance Technology Research Council and the results of interviews with 70 insurers from the council. Novarica also took into account additional informal conversations with members about budgets and plans for 2011 across the core systems map.
2011 IT budgets are holding within historically average ranges, which have historically averaged 2 percent to 4 percent of total premium, with P&C insurers spending more on average than life/annuity insurers. Overall, the report states, 2011 looks to be another year of “Do a Lot More with a Little More.”
Policy Administration. Policy Admin (including rating, underwriting and product management) is the highest priority area for insurers in 2011, since it is critical to introducing or modifying products, serving customers and distributors, and sourcing data for BI. Scopes of policy admin system (PAS) work vary widely, from just core to full suites.
Portals. Agent portals offering both informational and transactional functions have become a priority for insurers, as they strive to be “easy to do business with” for their distributors. Adoption of electronic applications varies by product line, with more complex underwritten products lagging behind simpler products. With the exception of specialty and large commercial lines, transactional agent portals are ubiquitous among P&C insurers. In 2011, P&C insurers are focused on enhancing these portals, including building out their capabilities. Most life/annuity insurers already have solutions and will continue to enhance and improve them in search of competitive advantage.
Business Intelligence. This is an area of focus across the board. Insurers are investing in BI and predictive analytics to improve underwriting, claims, marketing and internal operations, especially in P&C.
Other areas of focus, but not top priority, include customer portals, commissions and sales force administration projects, customer relationship management, software-as-a-service, document creation/customer communication management, document management/business process management, billing, and reinsurance and financial systems.
Infrastructure and security tends to be an ongoing low-grade issue rather than an acute issue that jumps into the top-three priorities for most companies. One exception is server virtualization, which is an active priority for companies that haven’t already done it. A movement toward use of cloud/asp/hosted solutions is common in P&C, but most companies are still concerned about security and integration.
Novarica concludes that U.S. insurers remain committed to making continued technology investments to improve customer and distributor service, achieving faster time to market and using enterprise data to make better decisions in marketing, product design, risk management and operations. Matthew Josefowicz, partner and managing director at Novarica, tells INN, "With the worst of the unknowns of the financial crisis seemingly behind them, insurers are focusing on improving their strategic capabilities to position for growth on an even more competitive field, where better information technology capabilities in communication, speed to market and risk analysis will drive advantage."
This article can also be found at InsuranceNetworking.com.
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