Celent Says

Regulations Raise IT Hackles

Catherine Stagg-Macey
Insurance Experts' Forum, June 23, 2010

The much-feared UK emergency budget speech was made yesterday, and amongst a raft of changes impacting every corner of the British society was an increase in the tax on insurance purchases. The rate is to increase to 6%.

A new peculiarity to this system is that tax on insurance sales will rise to 17.5% where the insurance is sold by seller of another product, e.g. mechanical breakdown insurance (on domestic electrical appliances and secondhand cars), travel insurance, and insurance sold with TV and car hire.

The challenge for the IT department is to respond in a timely fashion. Older legacy systems will have charges codified in several places, and reflecting this increase is not a simple matter. And once the change is made in several systems and many other places, a round of testing is required. This whole cycle of change can last up to nine months, depending on current workload and dedicated IT test slots.

In a conversation with a CIO on a different set of regulations, Solvency II, she raised the prospect of potentially having to replace incumbent legacy systems if the company could not capture the additional data elements required at a reasonable cost. Adding new data elements to a core system, and having this reflected in the appropriate screens is no trivial matter. And, once again, requires serious investment of IT staff for testing for production.

These real-life use cases highlight the need for IT systems to be able to keep up with the change of the business without crippling costs. In choosing new systems, IT folk must focus as much on functionality as on the cost of ownership. As this week has shown once more, fleet of foot should be a key mantra in new system investment.

This blog has been reprinted with permission from Celent.

Catherine Stagg-Macey is a senior analyst in Celent's insurance practice, and can be reached at cstagg-macey@celent.com.

Readers are encouraged to respond to Catherine using the “Add Your Comments” box below.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

Big Data Is Paying Off

Insurers are getting business benefit out of their big data projects, but these projects alone won't grow their business.

What Can Insurers Learn from Home Depot?

The latest cyber-attack highlights the importance of helping policy holders defend themselves.

Not Your Father’s Insurance Company

Carriers need to look at new and impactful ways to be there for their customers.

How to Attract Top Tech Talent

When it comes to rankings of the best places to work, insurers are few and far between. Here’s what those who make the lists do to appeal to IT professionals.

Watch Out. Apple with Mayo is Heading Your Way

From a health care, health insurance and Internet-of-things perspective, questions still remain.

New Generation of Data and Analytics in Cloud

Cloud-based data and analytics products are becoming more common among technology companies, small and midsize businesses and departments.