Insurance companies should continue investing in IT
systems if they want to remain profitable during a possible
recession this year, experts have advised.
"The early indications are that some of the markets in which we
operate will remain difficult in 2008," said
Standard
Life chief executive Sandy Crombie in the group's financial
results last week. But the insurer plans to improve performance in
the coming year by improving efficiency.
Businesses in the insurance sector are more likely to face
budget cuts because many of their parent companies and subsidiaries
will have US investments. As a result, they will be more exposed to
the effects of the credit crunch and so under greater pressure to
put IT projects on hold, according to Angel Dobardziev, practice
leader for IT services at Ovum Research.
But by using IT to improve three key business processes and so
cutting their operational costs, businesses could turn a profit,
said Adrian Potter, a management consultant at Winchester
White.
Those key processes are:
"Insurers should try and put these tools in their clients'
hands," said Potter.
Automatic underwriting is one example of supplying customers
with web-based tools to reduce the insurer's processing burden.
Dave Mace, head of e-business at insurer
Friends Provident,
which introduced a web portal to handle registrations from business
partners in November, said the system had helped cut manual
processing times.
Routing work to the right advisers and ensuring staff have
access to the right data is an area where workflow technology can
make a difference. For example, different insurance policies
require either standard or expert advisers to underwrite them.
Standard advisers, who handle the majority of policies, can be
offshored at lower cost, while the experts can be kept in-house but
in fewer numbers.
"But a system like this only saves money if the data is
correctly routed to the right person," warned Potter.
Standard Life boosted the number of sales calls its account
managers were able to make by 20% after installing
CRM software from Salesforce.com to improve the organisation of
thousands of customer contact details. The vision for the future is
that every company within the Standard Life group will use the same
CRM system to access the data they need.
Standard Life also aims to produce targeted marketing campaigns
based on customer profiles which are now centrally organised in
software.
As an extension of this, insurers should look to niche software
tools that analyse customer profiles in order to price their
products in a way that maximises profit, advised Potter. If an
insurer knows a customer is new to the business, the software can
calculate lower quotes that might win them over. And if the insurer
knows a customer already has several of its products, it can price
its quotes higher because the customer is likely to buy another
product anyway.
Bank IT spend to rise despite credit crunch