With apologies to Punxsutawney Phil, the economy has been seeing its shadow for well over two years now. It’s also been a long winter for the insurance industry, and it’s about time we had some springtime weather around here. The economy is beginning a fragile recovery, tempered by factors such as housing and automobile sales, which continue to fluctuate and even contradict expectations from one month to the next. And unemployment remains uncomfortably high.
With all of these factors in play, IT has to perform a balancing act to support present-day priorities such as cost containment and efficiency while preparing for and helping to enable a return to growth. It will be a while before premium growth returns to pre-recessionary levels, but we know it will come. In the meantime, how can IT help carriers maximize profitability right now as well be ready to smoothly handle increasing demand as it returns? Here are some suggestions:
- Improving process performance should be a top priority in good times and bad. The cost savings potential is huge. IT can play a key role here by pushing underutilized process automation tools, such as BPM and workflow, deeper into the organization. Seek and destroy manual workarounds and shadow systems.
- Taking steps to improve underwriting profitability will pay dividends now and in the future. IT can support this endeavor by helping to unlock and transform data that is currently too difficult or too time-consuming to access. This can drive better risk-based pricing decisions, better risk selection, and greater throughput with less hands-on underwriter involvement. IT also can help bring improved analytics tools that can help identify potential areas of growth. These might include specific regional areas, ethnic populations, and age groups. This represents a true partnering opportunity between IT, underwriting, and marketing.
- Providing differentiated customer service is absolutely essential to driving retention and enabling growth. Distinctive service retains profitable customers and attracts new ones. And policyholders and agents continue to raise their expectations based on their non-insurance service experiences. IT is essential to supporting the mission of providing high-level service through delivering next-generation relationship management systems, continuously improving online self-service functionality, enabling online co-service processes that allow real-time personal support, delivering intuitive functionality on mobile devices, and improving agents’ ease of doing business—just to name a few.
- It’s no surprise the soft economy brought an increase in certain types of claims, and fraud has risen. Workers’ comp, for example, is an area of scrutiny. IT can help improve financial results by partnering with claims to deliver stronger claims automation and improved analytics from claims data. This can help identify cases that have the potential to drive higher losses, enabling early and appropriate intervention. One simple example is flagging low-severity soft-tissue injuries. Such claims warrant a more senior adjuster to be assigned.
- Strengthening IT management practices now will provision the organization for profitable growth with less drama when that time comes. Some potentials:
- Adopt agile methodologies, which result in leaner teams and more aggressive results timetables.
- Take on fewer projects, and emphasize ones that are more impactful on revenue and customer service.
- Define project phases to deliver payback within a budget cycle.
- Modernize talent management practices.
During a long winter it is common practice to clean house, fix things up on the inside, and get ready for spring. As the market recovers, competitive pressures will escalate and resources will get stretched. Insurers will have to respond quickly and flexibly. Those that have used the relative lull of the downturn to streamline and retool will be ready. Through a combination of key technologies and partnering with the business, IT can help make that coming spring season a rousing success.
Rod Travers is executive vice president with The Robert E. Nolan Company, a management consulting firm specializing in the insurance and health care industries. Rod can be reached at rod_travers@renolan.com.
To learn more about “2010: The Road to Recovery” and to hear Rod Travers expand on how to position IT for the coming business push, register for the Web seminar sponsored by Tech Decisions. Click here for more information: http://www.tech-decisions.com/webSeminars/2010RoadtoRecovery/Pages/default.aspx?pc=TDseriesSite