Back to the future of technology trends: the insurance industry is on a quest for the "Holy Grail" of technology—that will, basically, bring it up to date with the 21st century

Risk & Insurance, August, 2005 by Matthew Brodsky

To this end, insurers are demanding answers from IT vendors. What is today's hottest technology? What will be tomorrow's? According to analysts and vendors at the Insurance Technology Trends roundtable at this June's annual meeting of the Insurance Accounting & Systems Association in Anaheim, Calif., however, insurers must solve other, more fundamental problems now if they hope to see technological breakthrough tomorrow.

"The insurance industry can learn from a drug and alcohol rehabilitation center," said Kimberly Harris-Ferrante, vice president and research director of Gartner Inc. A lot of people in the industry, she explained, aren't honest about how broken their processes are. And if they do admit that they have a problem, they still have no clue how, why and when it started.

Part of the problem, said Judy Johnson, principal solutions architect at Patni Computer Systems Ltd., is that insurers hold onto the delusion that a company's unique processes can be "competitive differentiators." Instead of separating the industry's wheat from the chaff, though, these different systems only hold the industry back.

"We've invested so much religion into the business processes and how we do things," Johnson said. "No wonder we have no IT business alignment."

And it isn't just technological pressures that drive the industry. According to Harris-Ferrante, insurers confront pressures from new customers, economics, the environment and regulation.

Insurers and IT vendors have the buzzwords--speed, agility, transparency and convergence--to confront these drivers. But these buzzwords may only be catchy sales pitches at best. At worst, vendors and the industry may not even be using the same dictionary.

"The insurance companies are so bad at communicating what they need," said Chad Hersh, a senior analyst with Celent Communications LLP, "that they end up with a product that's not what it's supposed to be. At the end of the day, nobody is happy."

"Most of us know we're broken," agreed Chuck Johnston, director of compensation management for San Mateo, Calif.-based Siebel Systems. "For an industry that focuses on risk management, we're really not good at quantifying these things."

Still, some companies have come up to speed, according to Johnston, adapting their processes to today's whirling cycle of business drivers.

Success can be seen on the vendor side as well. "Technologies are really starting to converge," said Patni's Johnson, "and people are learning how to package them to help people be able to run their businesses better."