Tips For Insurers To Revamp Their IT Strategy

Challenges in the marketplace such as evolving demographics, changing customer mindsets and rising expectations have dramatically increased business complexity, making it imperative for insurers to develop strong technical acumen and skill sets. One way of fast-tracking the process is for insurers to engage with technology vendors to build their IT road maps. IDC Financial Insights observes that insurers are becoming increasingly receptive to forging partnerships with IT vendors and a handful of vendors are emerging as the preferred partners of these carriers.

In the report “Vendor Assessment: Insurance Software Vendors — Definitive Players in Asia/Pacific”, IDC Financial Insights provided coverage of eight vendors that have established themselves as the preferred vendors of insurers in this region. The list includes enterprise vendors Computer Science Corporation (CSC), Oracle Corp., International Business Machines Corp. (IBM), and SAP, and specialist players 3i Infotech, eBaoTech Corp., Mastek Ltd., and EAB Systems Ltd.

“Each of these institutions brandishes its own unique value propositions. IBM, for instance, is in a league of its own when it comes to the sheer range of solutions that it offers. It also has presence in almost every part of the insurance value chain. eBaoTech, on the other hand, boasts a track record in technology innovation and advancements, and has recorded stellar performance in its implementations,” stated Li-May Chew, CFA, Associate Director for IDC Financial Insights Asia/Pacific.

IDC Financial Insights suggests that insurers should take note of the following when revisiting their IT strategy:

Procure IT solutions from quality vendors, which may be a better bet than building them in-house: Unless there are compelling reasons to have solutions developed completely in-house, it is a much better strategy to obtain ready-made solutions from a vendor with good standing and outsource the systems.

Ensure that the selected solutions and vendors are in line with the overall long-term business strategy of the organisation: Vendors are aggressively promoting their tools and solutions in the marketplace. There have been way too many instances where insurers have been swayed into purchasing inappropriate packages by vendors hawking offerings that boast the latest buzz words, or unnecessary bells and whistles. Therefore, insurers need to understand their requirements well in order to decide on a sound IT strategy.

Consider factors other than just the vendor offerings: This includes a score of other important elements like the ease of use of the technology; degree of customisation required, if any; whether the vendors prefer to build their core insurance platform on multiple solutions or on one system; the vendors’ industry accolades, as these demonstrate end-user confidence and satisfaction in their offerings; the providers’ turnover, market share, and financial stability (these factors signify the resilience and stability of their business operations, invest funds in R&D, and withstand financial catastrophes), amongst others.

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Retain a dedicated in-house IT capability: This is necessary even when outsourcing, and continually pay heed to the technologies that their fellow peers are investing in.

Meanwhile, vendors should explore emerging technology trends such as cloud computing and social networking, focus on evolving dynamics, reach out to underserved segments such as carriers in emerging markets or Takaful insurers, and, support fellow insurers in the creation of their own dynamic business framework.