By Bill Kenealy

The challenges faced by insurers transcend boundaries, even oceans. A new report from Boston-based Celent reveals that insurance companies in Europe face many of the same issues that bedevil their counterparts in the United States.

The report, authored by Celent Senior Analyst Catherine Stagg-Macey, says European insurers can expect a difficult year ahead, marked by muted premium growth and increasing claims costs.

To combat this, Stagg-Macey expects carriers to focus on improving profitability by leveraging technology to improve operations. "Automation is the lever to better profitability, and many insurers are reviewing how manufacturing techniques can be applied to insurance processes," she says.

Stagg-Macey says another area of focus will be channel optimization. To do so, she expects carriers to replace portals dating from the infancy of the Internet era with ones based on current standards such as XML.

"Investments made in the early part of the decade in direct Web sites and portals for brokers have come to the end of their natural lives," she says. "These systems are often inflexible, out of date in terms of Internet technology tools, and difficult to maintain."

Overall, she sees insurers applying greater emphasis on Web services and service-oriented architectures, in order afford greater agility to the business.

"One business frustration has been that IT constrains agility," she says. "Adding products, adding channels, making process changes, or responding to new regulations must happen on a critical path determined by the technology assets and infrastructure. Once in place, a SOA architecture provides considerable agility and reuse of business logic and technical investment."

Despite a natural inclination to constrain spending in recessionary times, insurers need to bear in the mind the long-term value of ongoing modernization efforts, Stagg-Macey suggests. "Projects with clear business benefit should be able to stand tall through this time."

This article was originally published on InsuranceNetworking.com.

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