Insurance: Strategic IT Investment Critical to Competitive Edge

Pamela Pecs Cytron

President and Chief Executive Officer

Pendo Systems

Welcome back to our forum Pamela. What are your thoughts on the importance of strategic IT investment right now?

Both strategic and tactical IT investments are more important than ever. Keep in mind that IT investment can include strategic outsourcing/partnering. I will answer this question specifically in the light of outsourcing. One of the core drivers for outsourcing is gaining the ability to focus on the core business. For this, the partner needs to prove that it will deliver/implement on time. Another core driver is cost control. With IT staff at most companies being very lean, the remaining end users must have the tools available to not only maintain existing end-clients’ (investors’) needs, but to increase their trust. Money should be spent on the things that are client facing as well as on regulatory requirements. The final driver is leveling the playing field. Outsourcing enables companies to gain access to expertise that is not available (or significantly restricted) in-house. Companies will get the additional benefit of getting software releases that are influenced by competitors.

Goals?

Efficiency is the biggest focus. Can you cut costs, can you reduce (or measure) risk, both from an investment and a processing point of view? With many companies focusing on several different lines of business (Life, P&C, Health, Private Banking, Broker Dealer, Trust), they may need to bring these processes together for core processing. Outsourcing may help achieve the goals of risk reduction and cost efficiency at the same time.

What are some key ERM lessons learned?

Insurance companies need streamlined workflow processes that are well documented and uniformly implemented throughout the company. Companies need to ensure that they will be able to comply with regulations. They also need to focus on transparency (of operations/cost/workflows, etc.) as it reduces internal risk as well as helps to earn and keep clients.

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

There are many effective risk management systems, but the critical elements to this function and system is the granularity and accuracy of the data being analyzed.