All the automation in the world cant change the fact the insurance industry still is a people business. But the carriers that are improving their bottom lines today are doing so by reducing some of those people costs to make jobs more efficient. Insurance companies are saying, If our largest single cost area is people, what can we do to make these people more efficient so we can get more revenue per dollar from every worker weve got, says Andrew Bartels, an analyst for Forrester Research.

The days of the quick fix in insurance are over, according to Bartels, author of a Forrester Planning Assumption entitled Improving Business and IT Efficiency Tops Priority List for North American In-surance Company CIOs. He explains, One of the key business conditions we are finding is its a little tough to grow revenues, he says. Theres a concern about underwriting risk, so the decision of a lot of carriers is not to take on new business. Obviously that hurts revenues.

If revenue growth is not available as an option for improved profitability, Bartels says, insurers have to look at the other side of the income statement. Clearly, the major thrust of what [insurers] are doing lies in the areas of being more cautious around underwriting and better claims management, he says.
An important factor in that profitability is a better alignment between the business side and the IT department, particularly for property/casualty insurers, which are facing newer threats, such as terrorism. Bartels believes insurance IT departments have been pioneers in adopting IT best practices. Things like dedicated people in the IT shop whose role is to work constantly with the business side to understand [the business] issues, anticipate [the business] problems, oversee the projects, and identify where IT can be of value to problems [business] already is dealing with.