Insurance: Strategic IT Investment Critical to Competitive Edge

Alex Aminian

President and Chief Executive Officer

DAVID Corporation

Glad to have you with us again Alex. How important is strategic IT investment for insurance carriers in this current climate?

We are facing precarious times and insurance organizations are not immune to these volatile economic conditions. While new sales are still critical to operations, more focus is being placed on retaining existing customers and expanding these relationships. We believe that strategic investment in technology not only improves customer satisfaction, but also helps carriers reduce both product development costs and cycles. Investing in solutions that focus on the customer experience should be an integral part of any carrier’s strategic plan.

What should be the goals right now?

By focusing on Business Process Management (BPM), organizations can evaluate and implement automation schemes that would streamline their entire operations. In turn, this will reduce their operational costs enabling them to re-allocate resources to focus on critical issues and provide superior customer service. According to KPMG’s recent study on ERM, only 25% of organizations with ERM initiatives actually incorporate technology as part of their overall strategy. BPM lays the groundwork for ERM and Business Intelligence efforts and can lend to a much greater success rate across the enterprise.

What are the key lessons learned in the area of enterprise risk management?

There are quite a few lessons learned in ERM. Organizations must routinely determine the effectiveness of previously implemented programs, measure their success, and adjust accordingly. Taking proactive and aggressive measures to pinpoint emerging areas that would benefit from loss prevention programs while keeping an eye open to the unknown, is another key lesson learned. Last but not least, it is critical to deploy loss preventions programs in rapid, broad-base fashion to insureds and offer incentives to re-enforce the key elements of ERM and influence risk behavior.

What do you consider the most critical elements of an effective ERM?

Successful ERM creates value across the enterprise by using an intelligence-based approach to analyze risks and opportunities. It is critical for the carrier to implement ERM based on experience and risk data found in core information systems, and allow for reporting across departments and data sources. The carrier should also equip staff with automated methods for defining, managing, and communicating ERM activities to the client base. Lastly, carriers should implement a closed-loop system with feedback mechanisms that actively support the continuous improvement of on-going practices.