Next Generation Insurance: Leading from the front.

Wikipedia refers to Web 2.0 as “web development and web design that facilitates interactive information sharing, interoperability, user-centered design and collaboration on the World Wide Web”.  For the insurance industry that thrives on information and communication, one would consider the advent of new technologies that enable social networking, a web 2.0 tool, a godsend.  But has the insurance industry adopted social networking sites like Facebook, LinkedIn etc. with the expected gusto?  Probably not, if industry analysts’ reports are anything to go by.

As I see it, the insurance industry is probably the best suited to leverage social networking to the fullest for a variety of reasons (not in any particular order)

• A huge workforce – both direct (employees, career agents) and indirect (insurance brokers, other channels)
• A demanding client base of various ages, financial background
• Dependence on paper and people – for underwriting and servicing insurance policies
• Operational areas working in silos – limited room for collaboration
• A constant need to liaise with various partners - doctors, labs, Motor Vehicle Office, Claims Adjusters, regulators etc.
• A large variety and amount of information to share with its internal and external constituents -  changes in rules, policy updates, new product launches, rate quotes and the like.

But many insurers feel they have gone the full distance after they set up a wiki site to enhance internal communication.  Why is it so?

One reason for the limited adoption of social networking tools from the carrier side could be the insurance industry’s traditionally conservative approach to new technologies and business practices.  And then there is the question of security - social networking often involves sharing sensitive and personal information. 

Any thoughts on insurance-specific inhibitors that could be holding back the insurers in whole-heartedly embracing social networking?

Posted by Sanjaya Kumar at 11:27 AM | Permalink | Comments (7) | TrackBacks (0)

There are varied views expressed by experts in Insurance on legacy systems in Insurance. A significant majority of insurers still have over 70% of their insurance systems as legacy. Because of this, over 70% of the IT budgets are kept aside for keeping the lights on!!  This bothers the business leaders and makes them question the value IT is providing to business.  IT is clearly not in the front seat driving the business unlike in some of the other industries IT drives business results.  Legacy systems also are quoted as the one of the most common reasons for the delays in launching new products. Longer cycle times for application processing, issues in claim processing and poor customer experience are the other common issues that are attributed to the legacy systems.

Do insurers consider this as a necessary evil due to high replacement costs or do they have options? Following are a few options adopted by various insurers based on strategic importance of IT, availability of budgets and business drivers.

1. Modernize with capability enhancement - Insurers are exploring opportunities to improve business capabilities while modernizing their IT systems. It is a much easier business case when IT modernization gets done along with business capability enhancement.  Application modernization and consolidation is done while keeping in mind the overall business vision and business capability enhancement.

2.Re-hosting - Completely shift applications from mainframes to newer platforms to reduce the risk as well as cost of operations and provide a starting point to extend Legacy applications. There are tools available for the lift and shift.  This is less expensive than the overall application consolidation / rationalization.

3. Re-factoring /Web enablement – Componentize existing applications to enable re-usability and improve maintainability. Identify and expose ‘services’ moving legacy applications towards a standard Service Oriented Architecture

4. Packages - Chose the right product from the 100+ product vendors available in the market

Modernization initiatives that tended to focus on improving only IT effectiveness or pure IT head count haven’t received much support from business. A broader focus on integration of business & IT architecture and business capability acquisition would provide better business value and hence easier to achieve success with modernization efforts. Considering the difficult times, any innovative approaches to reduce the cost of operations would be welcomed by business leaders.  If change has not been initiated already, it is never too late! 

Posted by Siva Nandiwada at 5:19 AM | Permalink | Comments (1) | TrackBacks (0)