The Fearless Forecast for 2011
Insurance Experts' Forum, December 28, 2010
As I sit here trapped by a snowstorm—the intensity of which no one had forecast—what better time to look ahead to 2011 and prognosticate on issues that will affect technology in the insurance and financial services sector?
Let’s start with one of the more contentious issues in our industry—the outsourcing of IT services to third parties, either here in the United States or abroad. It is perhaps no accident that outsourcing overall has been one of the first industries to see some recovery. The original appeal of outsourcing was that if we could get other people, especially in other countries, to do the same work for less than we were paying our American workers, we would save money. In many cases, that was true, and as the recession deepened, more of the same money-saving strategy seemed in order.
Fast forward to the beginning of 2011, and the Wall Street Journal is telling us that there are some positive signs for the economy in the U.S., including plans for additional corporate hiring. It’s important to remember, however, that what the rest of the corporate world does today, the insurance industry in particular will do two years from now (maybe). It is also useful to note that employment numbers are a lagging factor in any economic recovery, so even when the unemployment figures start looking better—and they haven’t yet—it is likely we will still be behind that curve.
It is economically lagging industries like insurance that will continue to wait out the hiring trends, and that will turn to third parties such as outsourcers to get their current needs met and to remain competitive. Add to this the fact that many in our industry have become comfortable with their outsourced relationships, and would just as soon let sleeping dogs lie. The sum total is a fairly rosy picture for those who provide outsourced IT services to our sector.
It flows naturally from these facts that the full-time IT employment picture in insurance and financial services will not be so rosy. In fact, unless you’re looking for work with an outsourcing provider, chances are you will have many doors slammed in your face if you seek an IT post within the insurance industry. And let’s face it, how many people want to work in insurance IT in the first place?
Our industry would be well-served to promote itself at the university level in order to raise its profile among the men and women who will be the IT workers of the future. Then again, if we’re not going to open the doors to our own workers—and I don’t see that happening any time soon—what’s the point of building such relationships? This will only change if our insurers, analysts, agents and brokers make a conscious effort to change it.
Time for me to get back to shoveling, but I’ll have more predictions later in the week. Stay tuned.
Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.
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