Insurance: Strategic IT Investment Critical to Competitive Edge

Bill Dochterman

Vice President Marketing & Product Development

LexisNexis

Great to have you with us Bill. What are your thoughts on strategic IT investment?

Investing in mission-critical and operational systems during these turbulent times is critical to most carriers’ ongoing competitiveness if not their survival. After a tremendous amount of acquisition activity during the 1990s and early 2000s, many carriers are still trying to deal with the inefficiencies that resulted from assuming multiple books of business and their associated support systems. These systems, mostly built on older technologies, inhibit the carriers’ performance, their agility in the marketplace and consume much needed resources from a maintenance perspective that could otherwise be invested into other new projects.

Goals?

Carriers operating multiple enterprise systems (for policy, claims and billing) should focus on platform consolidations. For many carriers, reducing the number of platforms they are supporting provides the most significant opportunity to reduce operating expenses. Doing so affords them the opportunity to redeploy the resources that they would otherwise be committing to ongoing maintenance of those platforms to other more strategic projects. Another set of efforts also geared toward operational efficiency are projects to streamline critical processes around underwriting and rating as well as claims triage and case evaluation. The marriage of data services and predictive analytics is one of the most interesting developments happening now in commercial lines applications.

What should companies avoid doing?

Now is not the time to attempt projects that span multiple years or that have longer-term ROI. Those who do attempt these types of projects may find their funding evaporate if quick wins are not delivered to the organization. Major replacement initiatives that attempt to replace all systems at once are suspect because of their inherent riskiness as well as the time it takes to deploy and benefit from the new systems. Most carriers are not going to have the patience to wait 5+ years to realize the ROI. Most available capital today is being allocated to near-term revenue generating, or expense reduction opportunities.

New capabilities?

As technologies, data services, and predictive analytics become more inter-related and used in conjunction with one another, new possibilities are emerging to further streamline insurance operations, particularly in commercial lines.