ASIA FOCUS : INSURANCE BENEFITS OF TECHNOLOGY

Insurers urged to keep up with IT

Umesh Pandey

Singapore - The region's insurance sector urgently needs to pick up the pace of information-technology adoption if it is to be competitive and efficient and wishes to expand its market size, says a leading analyst.

"It is not necessary to change. Survival is not mandatory," Barry Rabkin, global head of insurance practice for Financial Insight, a unit of IDC, quoted Edward Deming as saying in a recent talk in Singapore.

"What insurance companies need is to seize the day - carpe diem," he said or the sector that is gradually seeing a cross selling between other financial institutions may eventually have a difficult time surviving.

"Their survival will hinge on the level at which they embrace technology," he added.

Noting that there were various incentives for the insurance industry for the next five years or so, he said his predictions were that the insurance industry would continue to see more mergers and acquisitions and higher profitability although on the property and casualty side there would be higher claims and more settlements.

On the life and annuity side, insurance companies are likely to see higher competitive pressure from banks and investment firms, more stringent requirements. Therefore, companies in the sector have to focus mostly on growth story.

He said that the top 10 strategies for the insurance sector in the region, apart from focusing on growth, included competing as an enterprise, orchestrating events and experiences, supporting role-based functionalities and being forward and responsive.

Other areas on which firms should focus include agile compliance, protecting the firm, operating in a shifting sourcing ecosystem, improving data dealing and coherent distribution management.

On the issue of growth, Mr Rabkin says that there is a communication failure between the insurers and the technology providers. Most insurance companies believe that their paths to success depend on growth rather than reduction of costs as most technology providers believe.Citing a survey, he said that about 40% of companies surveyed said that growth was their priority while only 20% said cost reduction. By comparison, 16% of technology providers said that cost reduction was priority to insurance companies while only 8% believe that insurance companies believe in growth.

"There's a mismatch between the two," he said, adding that this was not good as insurance companies globally were going to spend heavily on information-gathering process over the next two years.

He said that issues such as fraud protection were among the key areas that most insurance companies were looking to tap into.

Bangkok Post

Last Updated : Sunday April 08, 2007