NU Online News Service
Many insurers are unaware of how much information technology is available to them, and many IT providers don't fully understand what areas carriers want to spend on, according to a study.
The findings are contained in a report by Boston-based SMA, an insurance industry research/consulting firm, that said its analysis was based on 100 hours of interviews with senior insurance leaders.
"There's a perception gap out there," said Mark Breading an SMA partner and co author of "Managing the Wave: Technology Spending and Solution Alignment."
Breading explained that insurers when asked about the IT community said they felt their needs were not being satisfied and their choice of firms was limited to a few.
He said SMA has found in the IT solution provider marketplace there are 500 companies selling products for property and casualty insurers that had some level of insurance content embedded in their offering.
Insurers, he said "were not aware that there were this many providers out there. We took a look and there's a pretty rich set of offerings in the marketplace" and "many insurance companies are not aware how far they [the providers] have come and the maturity of these offerings."
Still, while technology firms understand that insurers want to spend to improve operations in areas such as cost containment and business processes, they don't grasp insurers' aims for future growth. "Some areas are a big mismatch...a pretty stark difference if you look at some of the data."
The SMA study found there are differences in the IT aims and demands of insurers depending on market segment, size and other factors.
In terms of spending in the coming year, Breading said smaller-tier insurers are more aggressive about increasing their budgets. In the tier with $250 million to $1 billion in gross written premiums, 54 percent project an increase.
In the overall marketplace, only 24 percent of insurers are predicting a decrease.
From a technology perspective, SMA spokesperson Deb Smallwood said personal lines are more advanced than commercial lines with better straight through process, analytics and use of external data.
"Personal lines has been automating underwriting longer than commercial lines, but some would say the risks aren't as complex."
Breading said in doing the study, "we started with the hypothesis there is no such thing as an average insurer."
In the past he said examinations of IT usage have been done with a broad brush, but SMA has realized carriers "are very different" depending line of business, size of company and other variables.
The 30 page report sells for $1,695 and can be purchased online at: https://strategymeetsaction.com/our-research
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