Insurance: Strategic IT Investment Critical to Competitive Edge

Stephen Korow

Vice President, Technology

Decision Research Corp.

It is a pleasure to have you with us again Stephen. How important would you say strategic IT investment is for insurance carriers right now?

Perverse as it sounds, this economic environment is an opportunity for IT. A sound IT investment strategy can position the company to quickly accelerate into the next growth cycle. The very core of IT’s existence is to derive greater efficiencies from available resources and provide automation in support of business goals, thereby driving down the cost per business transaction. This has never been truer.

What goals would you advise carriers to focus on right now?

CIOs need to be proactive. The short-term goal should be to identify opportunities for saving while staying aligned with the long-term strategy. More lines of communications should be opened with business users to identify opportunities for making the company more profitable and improving margins. The focus should be on customer retention. Understanding which technology investments help to increase productivity and better serve clients is a first step. This environment also presents an opportunity to make those changes that can only be made during times like these. Data center and help desk consolidation of multiples reduces cost and gives carriers a platform that is easier to scale as carriers grow. Find ways to optimize existing investments in packaged applications whether by pushing out upgrade cycles or renegotiating support contracts with vendors.

Is there anything they should avoid doing right now?

The worst thing IT can do is to get focused on cutting costs. When the economy turns up carriers will not be able to take the business where it wants to go. When making cuts, involve the business users and weigh the short-term benefit against the long-term cost. It would be foolish, for instance, to pull money and resources away from architectural strategy. It may look good now but it will kill the business when things start to look up.

What are some of the new capabilities out there Stephen that carriers should be excited about?

Research shows that a 5% increase in customer loyalty can lead to 40% to 90% increases in lifetime value of customers. Predictive analytics tools arriving today can help carriers identify which customers to target so that the business derives that greatest value for its investment in marketing dollars. The Software as a Service (SaaS) deployment model provides a low-cost entry point for new technologies in times of economic downturn. Many of these services will fill gaps in business processes without significant upfront licensing costs.