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By CYRIL TUOHY, managing editor of Risk & Insurance®

GRAPEVINE, TEXAS---When it comes to grading the insurance industry's effort at adopting new technology, the results are a mixed bag, according to a trio of technology experts.

The newer systems have forced changes on carriers' business processes, according to Stuart Tainsky, senior vice president and chief information officer with White Plains, N.Y.-based insurance carrier PURE.

"Industry members should be proud of the fact they are opening their minds to providing new technology capabilities to their agents and distribution channels that eventually pass on to their policyholders," he said.

Added insurance technology consultant Deborah M. Smallwood: "They're making progress in the use of business intelligence and analytics as well as business process management."

Tainsky, and Smallwood, founder of SMA Strategy Meets Action, an Overland Park-Kan.-based insurance technology and business consultancy, were quoted in an industry newsletter covering the annual convention of the Insurance Accounting and Systems Association (IASA) this month in Grapevine, Texas.

IASA brings accountants, actuaries and insurance IT experts together to speak about issues facing the industry.

Smallwood and Tainsky were joined by Tom Phelan, president and CEO of the Towson, Md.-based Injured Workers' Insurance Fund. The three were guest speakers at a technology supersession offered every year by the IASA.

Underwriting, a labor-intensive task and a core competency of insurance carriers, still needs more automation to give underwriters access to the best information, according to Phelan. That's particularly true as customers expect quotes to come back in a matter of days, not weeks ... and certainly not months.

From poor data quality to inconsistent formats to a multiplicity of tools used for routine reserve analysis, actuaries spend too much time collecting data instead of analyzing it, and "opportunities exist for standardizing data collection, filtering, editing and storage," according to consultant William K. Freitag.

Freitag, CEO and managing partner with Agile Technologies, based in Bridgewater, N.J., hosted a session on accelerating actuarial processes.

35 CARRIERS GO LIVE WITH NEW POLICY SYSTEMS

Underscoring how serious the industry is about upgrading its policy administration systems is the fact that more than 35 U.S. property/casualty insurers have gone live with a new policy administration system in the past 12 months, according to Matthew Josefowicz, director of the New York City-based insurance technology consultancy Novarica.

About half of the property/casualty carriers studied by Novarica have converted to new policy administration systems before deploying them within the company, as opposed to converting policyholders to the new system at renewal, Josefowicz noted in an article published this week.

Carriers have concluded that the need for greater business capabilities rather than the need to reduce operating expenses justify moving ahead with a new policy administration project.

"The business drivers for policy administration system replacement generally are related to the deployment of business capabilities rather than cost reduction," Josefowicz wrote.

What matters to carriers is that they become more nimble by improving their ability to change rates and product features quickly to adapt to shifts in market demand.

Carriers also want their agents and brokers to have faster access to policies, claims data and commission information, and carriers need to offer internal departments better access to data for analytics and performance reporting, Josefowicz also said.

June 10, 2010

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