In the area of growth, Smallwood points to distribution channels and expanding market shares as one direction in which carriers can focus their energy, with the second being customer service and building a single view of the customer. In the area of cost containment, she points to three factors: core systems, data integration, and sourcing strategy. In the area of risk management, she believes attention should be paid to regulation and operational resilience if a carrier is to achieve a successful growth strategy.

Insurers still are trying to cut budgets, according to Smallwood. But they are pumping new money into their budgets for new initiatives, she adds. They are focusing on the sourcing strategy to evaluate their options. [Carriers] are looking for servicing alternatives, and something we really are stressing is a sourcing strategy, she says. Examples of this strategy include outsourcing, contracting, using an offshore source, or a hybrid approach.

You have to look at the alternatives, Smallwood says, and make decisions on how certain types of new development projects or maintenance projects are going to be sourced, and the flip sidemaking sure your source will perform.
The distribution channel will receive a great deal of focus this year, she believes, as carriers develop systems and distribution channels to improve the online application forms agents use. Because at the end of the day, the agents are going to select the carriers that have the most efficient software and [the carrier] they have the best relationship with, says Smallwood. Surprisingly, she asserts pricing often is a secondary matter compared to ease of doing business.

TowerGroup sees carriers making more investments in the areas of self-service portals, the Internet, and CRM. Carriers are looking to see how they can get value out of their investment, Smallwood says. Some carriers spent a great deal of money in the past on CRM solutions. People arent willing to scrap multimillion-dollar investments, she says.

The value of Web services in the world of insurance IT will not abate, Smallwood maintains. There are lots of great software packages out there that do integration, she says. We see dollars being spent there. With some of the tools that are available, insurers are able to [integrate systems] without replacing their back-end systems.

ROBERT REGIS HYLE