GREEN SHOOTS

Is the glass half empty, or is it half full? By many measures the insurance industry has had the worst couple of years in a long time–and yet the industry, particularly property/casualty, rode a mild hurricane season, redundant reserves, and the nondiscretionary nature of its business to an encouraging conclusion in 2009. A weakened but still strong insurance vertical is poised for growth in 2010 and beyond, assuming the “green shoots” keep sprouting and growing.

Where would growth come from? Any general uptick in economic activity will generate a larger insurable pie. But insurance is a mature industry marked by slow growth and low profit margins. Many of its products are regarded by the purchasing public as commodities that are bought (and sold) largely on price. How can the IT shop of an insurance carrier help position the company for growth? There are a couple of obvious levers IT can help to pull in combination with its business partners.

First, there is growth. Given the maturity referred to above, growth for most insurers can come only at the expense of other carriers–either by acquiring business from other companies or by acquiring the companies themselves. The well-established trend regarding building and deploying high-performing agent portals is recognition (by carriers with independent agency distribution channels) that most new business will be another carrier’s old business. Our firm has seen firsthand the leverage of an easy-to-use quote and new-business capability deployed to an independent agency carrier’s sales force. In two instances during the current recession, carriers we work with have driven higher submissions, better quote-to-issue ratios, and enjoyed more profitable pricing through agent portals supported by automated underwriting, predictive analytics, and straight-through processing. This business, by definition, came almost exclusively from the competition.