Exactly one year ago our cover asked: "Will insurance IT get Scrooged in 2009?"
Now, as we close out the year, it appears, given the decline in the economy in general, insurance IT not only made it through comparatively unscathed, its stock in trade actually seems to have risen, with business recognizing the value IT brings to the table (for more, see cover story, p. 12).
Not only is this a change from the status of the prior year, it’s also a sea change from the last bumpy financial ride the country took at the start of this century, when IT was viewed largely as a cost center and cost-cutting was nicking into the bone of IT departments.
Much of this is due to the maturation of both the business and IT sides of the house. It’s also due to the fact insurers generally haven’t taken as big a hit as many other financial sectors (with the possible exception of the life/annuity business). Additionally, insurers have recognized they need to do business the same way customers want to manage their lives (which means via ever-increasing reliance on the Web), and they need to be easy to do business with.
As opposed to the start of the decade, the lessons learned this time around seem more strategic rather than knee-jerk, and if that gets proven out, it’s a good thing for the health and well-being of the industry.
Here are a few lessons to consider: (1) The way to handle a downturn is not to turn off innovation and hunker down but leverage it to do critical functions more efficiently—one obvious example has been the implementations of SOA. (2) I remember going to an enterprise risk management session at a conference in the first few years of the decade and being one of maybe five people in attendance. Today, the value of ERM has spoken for itself, with the companies doing it best able to ride out the storm much more gracefully. (3) This same benefit goes for companies good at compliance, governance, and transparency. (4) With the volatility of the financial world and the sometimes unexpected turn of customer needs and predilections, flexibility, scalability, and speed are perhaps the most important core competencies. Yes, underwriting, claims processing, policy admin, and customer management still are the legs of the insurance stool, but as conditions evolve, all of these need to be as agile as possible.
While it’s probably not the way we’d like it to be, often it’s the bad experiences in life that are the best teachers. I believe we’ve learned many good lessons from the bad times, and those lessons will lead us eventually into much better environments. The industry overall is getting itself in shape to take advantage of the opportunities to come.
With best wishes for happy holidays from the staff of Tech Decisions.