An Insurance Technology Paradigm Shift
Insurance Experts' Forum, February 17, 2011
How do insurers compete? How will they grow top-line revenue and market share? And where will their growth come from in 2011? The nature of these questions may elicit familiar discussion among insurance business line executives, yet three insurance technology executives lent their views to these subjects and more at the Celent 2011 Insurance CIO Roundtable last week in New York.
The trio's responses point to a changing world for insurance technology leaders. Their roles are evolving to encompass more than just a services model and they are increasingly being called upon to help set enterprise-wide strategic direction for long-term company results. Is there a little pressure that goes along with being considered a business expert? You bet.
The three panelists were asked to respond to survey results and statistics presented earlier by Celent senior analyst Donald Light, who moderated the panel.
Donna Nelson-Duey, VP, Technology Services, Sun Life Financial, opened the discussion by saying her company can no longer compete with just products, especially in the guaranteed benefits space.
“We also need to compete with customer service and distribution excellence,” she said. “From an IT perspective our focus is not just on new products, we are investing in Web-based automation and distribution, CRM, reporting, mobile computing. From an IT perspective this makes for ‘interesting times.’”
For Chubb Commercial Insurance, notes SVP CIO Mark Berthiaume, products had always been looked at as the new opportunity for growth. Chubb recognized this issue two years ago and launched a “Project Catalyst” initiative that includes SWAT analysis.
“We looked at our strengths and weaknesses, as well as our competitive set, and came up with a plan that addresses our operating model, operating efficiencies and customer service levels,” he said. “The Project Catalyst was the business side’s response to the new normal,” he added. “IT is gong through structural processes, shared people, and evaluation of our services as part of this.”
Bob Ingram, VP, CIO of The Hartford’s Commercial Consumer Markets Technology area, reflected on The Hartford Financial Services’ tenuous year, alluding to upper management turnover, and its efforts to rebound after accepting and repaying $3.4 billion in U.S. Troubled Asset Relief Program funds.
Ingram told attendees that The Hartford has responded with broad ownership in improvement in costs and time to market. “I think we got away from investing in people,” he said. “But we are changing the focus from external to internal – we had heavy investment in coordinating communication, training, but got away from this. We will make training and skills investments this year.”
To understand IT’s growing role in the insurance organization’s overall success in the market is to understand the CIOs attitude about leading the way.
Reflecting on Chubb’s change in structure, leadership and growth, Berthiaume acknowledged that 2011 will be the toughest year they have had in IT.
“Growth is enabled by what we do in IT,” he said. “To date, almost all the opportunities we’ve seen have been around speed to market. And because we are going into new places with a different operating model, change management is more front and center. IT will have to fuel this.”
Berthiaume offered the example of Chubb’s buy/build strategy, the benefits of which has made believers out of both business and IT. He says product line-of-business managers are especially enthused. "They are actually excited about product development—the whole ideation to migration issue – pulling IT and business together.”
Nelson-Duey took that discussion a step further, stating that Sun Life Financial began its path to transformation before the recession, looking at ways to wring costs out of the organization.
“Productivity is a focus in both IT and the business,” she said. “We are actually ahead of the business in terms of measuring product and continuous improvements. Business is looking at IT as more of a partner now.”
Of course, it’s no surprise that no one on the panel mentioned recognition for these efforts. The long-held attitude that the IT department was there to service the business may still ring true at many insurance organizations, for the Nelson-Duey, Berthiaume and Ingram, I have the feeling that there is enough satisfaction in quietly knowing that their efforts are leading a new paradigm.
Pat Speer is editor-in-cheif of Insurance Networking News.
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