A little self-examination goes a long way for insurers when it comes to the purchasing of technology solutions, a new report from Boston-based insurance industry analyst firm, Strategy Meets Action (SMA) finds.
Titled "Catching the Wave: Insurers' IT Buying Behaviors," the report is based on survey and interview data gathered from nearly 200 industry participants and is the most recent addition to SMA’s Insurance Ecosystem research series.
Deb Smallwood, founder of SMA and co-author of the report series, says insurers that fail to account for uniqueness may end with technologies solutions that don’t address underlying business problems. “What became very apparent in this research is that you have to look at all the characteristics of a carrier,” Smallwood tells INN. “If insurers are not being clear about who they are and what they need, and vendors are pushing one-stop shopping, there can be a mismatch.”
To prevent this misalignment carriers need weigh matters such as whether they are they trying to survive or grow, whether they prefer to build or buy, their adoption of service-oriented architectures, their current app portfolio and the state of their data, Smallwood says. “There’s no average insurer. This report amplifies how different every carrier is.”
Indeed, in light of these specifics, traditional groupings of insurers by line of business or size, are less accurate says Karen Furtado, a partner at SMA. “There really isn’t an average insurer, or one metric that tells you how a certain insurer is going to behave,” she says.
However, Furtado says the number did reveal a trend toward technological innovation among carriers that service both personal and commercial lines as opposed to carrier that served one line of business. “We noticed that when a company’s behavior is focused on both personal and commercial lines their behavior is very different,” Furtado says. “They tend to be early adopters of technology to help bring a wider variety of products to market.”
The numbers also conveyed a sharper focus on business process optimization among these carriers combined lines carriers. “It has to do with the complexity of the delivery of their products, their channels are quite diverse,” she notes.
As for specific spending trends, Smallwood sees an increase in marketing spend, with carriers increasingly using analytics and third party data to aid market segmentation. “Another area where the spend is shifting is using BI to fine point what risks they want to be in,” she says. “We’re seeing data and analytics across all front end processes.”
When it comes it to the overall level of spending, Furtado says for many carriers it’s business as usual, but those fixated on growth are currently making the technology investments they need to position themselves when economy turns. “If you think about the spend over the last couple of years even with the downturn in the market, spend has been relatively flat,” she says. “You still see really big projects but they have to have ROI and be tied to business strategy and they business sponsorship and there’s no room for mistakes.”
This article can also be found at InsuranceNetworking.com.
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