IT Spend in Insurance

Gone are the times when Insurance companies viewed IT as a mere tool with no direct benefits from its implementation and usage. IT was looked upon as a MIS functionary - i.e. statistical and executive reporting toolbox with no potential and direct cost benefits to the business.
Fastforward to current times, despite the economic downturn all over the world, according to a recent study more than 50% of the insurance organizations are expected to revive their IT budgets.
After all companies that have a surplus balance have to make sure that money is well spent.

There are numerous reasons that leads organizations to improve their IT Infrastructure, Systems and processes

1> IT Industry Business expertise
Looking at the technological advances today, Insurance companies (or any other industry for that matter) have to compete and excel in the business arena.
There are so many IT vendors, application and solution providers who provide a wide range of applications and support that not only ease the way Insurance companies do business but also add to the overall bottomline.
This has only become possible for the IT Vendors becuase of their number of years of consulting and hands on experience in the Insurance domain, understanding and working on the customers business model, closely watching their pain points and business naunces.

2> Enterprise solutioning advantage
IT has become a very important function of Corporate strategy and solutioning, even though IT does not always have a tangible impact on business benefits, be it Policy, Billing or Claims Administration or overall Operations, Customer service, Underwriting, Adjusting, Claims Investigation or Financials like Payments, reserving, Quotations etc. IT is still one of the major functionary that can make a difference for a company to have an edge over its competitors.

3> Cost Benefits
In today's times cost of IT hardware, Software, Infrastructure and resource costs due to Competition, offshoring and Application managed services, hosting solutions and consulting solutions - has really made the entire realm very exciting thus helping your business in all ways possible.

4> Cutting edge Soulutions
With the number of IT solution vendors, service integrators, consultants in the market and the level and maturity of IT solutions based on the number of years of experience input, the solutions are really cutting edge in the sense they address all of end user and customer needs, they are very user centric and friendly and at the same highly customizable and scalable.
For instance a legacy Policy administration system that has been installed and developed 15 years ago compared to a current state of the art Policy administration System solution developed using Java, .NET technology solutions, using web services architecture having plugins, integrations, web service calls to enterprise level authentications, third party integrations like CLUE Reporting, ISO, Glass estimation solutions, Comparative rating engines etc. All of this at a very competitive rate too.
No prizes in guessing which solution wins hands down.

A lot of CIOs and IT senior exectives are now turning their attention to better front end processing and more competive software solutions that can be easily integrated to their current what i call the "Spaghetti IT architecture" and infrastructure and also provide much improved software benefits in the long run.

So what are the areas where companies are spending money on,
1> Data Warehousing applications -
Data warehousing is like the pulse of Insurance business. The data analysis reports indicate the financial health of a business and are indicative of times to come. They also prompt for corrective actions that can be taken by exectuves if and when required.
Data Warehousing spend is on Predictive analytic solutions, Data mining and Business intelligence solutions

2> Business Applications and Solutions
If Data Warehouse is the Pulse of a business then the applications that run the business is the blood and lifeline.
The better, functionally rich, efficient and powerful the applications that help you process your business, the more ease for you to do your business.
Increase spend for better applications and application management that would give companies a competitive edge allowing the Company to shift their focus on more important matters like running their core business competitively rather than worry about IT applications crashes, bugs and poor performances.
This requires increase budgets for more application development resources, better and more powerful infrastructure. More money spent on IT solutions like cutting edge Policy, Billing and Claims solutions, enterprise level CRM solutions which would help improve customer-carrier relationships etc
Another important factor that helps reap better IT benefits are business level process changes to better suit the business needs and aligning the features and functionality supported by a Product software with the business.
For example, i have worked for numerous organizations that would follow the traditional manual triaging and assignment of claims even though the daily average of new and reassigned claims volume was around 200. By making use of application generated diaries and automated assignment triggers, the organizations saved atleast 20% of their processing time due to the automated workflow solutions.

In today's world insurance companies can reduce their operational costs and processing costs using IT methods and in turn achieve better efficient operations and hence more profits.
Let me know if you have any special comments on this or have seen some other aspects that are not covered in this post.