Midsized Insurance Companies and Operators Getting the Global Act Together
Date: Wednesday , March 02, 2011
Changing Industry Demographics
One of the most impacted industries worldwide during the recent financial meltdown was the Insurance sector. The insurance sector is steering towards a recovery with a precise review of its strategies and procedures. Fuelled by the extreme stress on profits, increased regulatory reforms and emerging new markets insurance operators are closely assessing their people, processes and systems to gain competitive advantage.
Increased globalization, new product requirements and altered customer relationship dynamics is forcing the Insurance operators to have applications/systems capable of accommodating to new business necessities & rules with minimal time for implementation and limited dependency on IT staff. Requirement of complex and dynamic enterprise administration system for rapid business processing and on-demand customer services is stimulating the Insurance sector to transform their IT team into a high performing cohesive unit or propagating/propelling them to search for smart and expert IT partner.
Faced with this barrage of requirements and a changing accounting & regulatory environment, the Insurance sector is increasingly looking at IT industry and its smart solutions to cope with such demands. For this, it is increasingly becoming evident to insurance operators that smart, dynamic and scalable solution will form the bedrock for achieving optimal usage of capital and resources. As market conditions are improving, insurance operators are re-designing their business models having Information Technology as a vital cog for success.
In the present day, application management services are provided at competitive costs with high quality standards region independent. Be it Independent Software Vendors, established Insurance carriers or Third Party Administrators, all venturing into the possibilities of global sourcing for integration of Information Technology into their business model and processes.
Information Technology trends in Insurance Industry
Global sourcing business models based on an integrated enterprise wide IT infrastructure are fast becoming the phenomenon among Insurance operators. Insurance operators active in the global market arena are constantly under unguarded risks due to lack of authentic and real-time data availability. To counter this, sourcing of IT solution from a harmonized IT partner has become a prime need. The main business imperative that the insurance technology is focused on is cost effectiveness, business growth and ease of doing the business worldwide.
Emerging IT technology standards such as Service Oriented Architecture (SOA), Software as a Service (SaaS), Cloud Computing, Web 2.0 and Internet is providing options for operators to design blueprint for various insurance workflows. Scalable and cost-effective solutions with multi-language support are being considered for various front office & back office functions such as underwriting, marketing, policy administration, claims, billing & finance, etc. Achieveing this through the global IT sourcing is helping operators realize quicker deployment time and reduced costs. Few of the trends currently prevalent in the Insurance technology market are:
1. Straight Through Processing – Solutions with defined electronic processing mechanism with minimum manual intervention.
2. Dynamic Policy Administration Suite – Policy Administration suite capable of catering to multiple lines of business and handling entire policy life-cycle including policy services.
3. Integrated Claims Management Solution – Enterprise wide claims solution supporting comprehensive claims process cycle.
4. Business Rule Engine – Intelligent Business rule engine with feature of rule automation and ease of integration with external applications.
5. Mobile Solutions – Comprehensive applications that enable users to stay connected.
6. Interoperability – Solutions that can seamlessly exchange data from external applications
Rampant strides in technology, competitive market scenario and an ever widening digitalized mobile world is challenging Insurance operators to reach out to customers in multi-dimensional ways and bridge the chasm that currently exists between them. Insurance operators are acknowledging the necessity of mobile solution & its adaptation and are scouting for accomplished IT partners and expert solutions to bridge the gap.
* Sourcing Guideline Schema
Through the journey of our experience in dealing with numerous Insurance operators in diverse roles, we have identified few pivotal parameters in selecting an outsourcing IT partner and that which guarantees for a successful relationship. Few are mentioned below:
* Technical Expertise – Technology is significant for integration with other systems in existence and future systems that would be developed or purchased. IT providers need to have access to wide array of skilled technical professionals and competency not only in current technology utilized by the industry but also invest in future technologies and standards.
* Domain Knowledge – An IT provider’s proven expertise is one of the top factors especially in healthcare and insurance. Ability of the IT provider to understand the requirements and translate those into products or services plays a major decision factor.
* Compatibility – A Provider’s size including offices and employees is an important criterion that is looked at sometimes. The provider’s network, facilities and the security policy in place play a considerable role during ratification.
* Work Culture and Environment — Provider who understands outsourcing business objectives and internal processes, along with issues faced by client IT organizations is highly rated. In the recent trend, customers prefer those providers exhibiting cultural harmony trickling down from the top management. Culture represents the DNA of the company that includes corporate outlook, process methodologies, service delivery, innovation, flexibility, etc.
* Proactive and Transparent Two-way Communication – It is important for both sides to communicate effectively and frequently. Today’s businesses are dynamic and the IT teams that are developing the systems need to be adaptive and agile. IT builds systems as per their understanding of what the business needs are. If there is a significant gap between what IT understands and what the business needs, it can be a disaster.
Be it the outsourcing of development of a desktop application or a smart-phone solution catering to multiple line of business, technical competency underpinned by strong domain comprehension by the IT provider enhances the capability of Insurance operator in dealing with arising opportunities, meeting continuous customer demands and complying with the fluctuating regulatory requirements at reduced cost.
Global sourcing of IT, a vital need for Insurance operators to step into the world market, which was hitherto, a play only for Large Insurance organizations, has now become a strategic objective of several midsized organizations and TPAs as well.
The author is is the CEO and Co-Founder, SPAN Systems Corporation