Determination of these technologies is based on Gartner observations and discussions with clients globally.

There is a long list of emerging technologies that p&c insurers can use to improve their processes--from product development through customer service. Many of these technologies, however, provide only incremental or minor improvements, have limited-to-no return on investment, or do not have the promise to help p&c insurers radically change their business models, reduce operational costs or generate revenue.

With budgets challenged, and with limited funding for discretionary spending, it is imperative that organizations prioritize their investments to those that will generate the greatest ROI and drive the most value.

Based on Gartner's review of the p&c insurance sector, software market, client priorities and past Gartner studies, the top-10 technologies with the greatest impact for p&c insurance have been identified.

Note that some are more applicable to personal lines because much of the industry change projected during the next five years is a result of evolving technology use among consumer groups.

The following are what we believe will be the top-10 technologies for p&c insurance, although not in any particular order. The importance of each technology depends on your individual needs and market niche:

o M:

There have been significant improvements in the software market during the past six-to-seven years.

Vendors have developed modern policy and claims management systems that are componentized (sold independently, rather than in a suite), offering enhanced workflow and business process management capabilities, with rules separate from the source code for easy configuration, supporting industry standards (for example, ACORD Standards), and built on newer technology platforms.

The adoption of these systems by personal and commercial p&c insurers can provide significant value, including reduced total cost of ownership when legacy systems are decommissioned, faster rules and workflow changes, easier integration with surrounding systems, reduced challenges with staffing to support old technologies and programming languages, and improved long-term maintenance.

o :

Insurers operate a large ecosystem of systems and applications that integrate for seamless processing. In the past, companies had to hard-code integration between systems, which was costly and time-consuming, created challenges when applications were replaced and integration had to be redone, and often was difficult overall due to technology incompatibility.

The use of Web services/service-oriented architecture enables companies to deploy services instead of using one-to-one integration, and will help insurers improve their straight-through processing capabilities and reduce integration costs.

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Property and casualty insurers are increasing their focus in 2010 on improving how data is used and the value derived from past investments in data warehousing.

Expanded use of data mining and analytics will assist p&c insurers in obtaining more-granular insight into customers; greater operational performance; better claims performance; and reduced losses, leakage and underwriting risks.

The outcome will be improved risk management, compliance/reporting and customer intelligence that can be used for personalization and decisions regarding channels and products as well as provide insight into performance and process problems.

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Traditional data analysis processes are typically historical (analysis and reporting of the past) or current day (analysis and reporting of current day position). Using predictive modeling, insurers can analyze data and create models that will enable them to predict future behaviors or outcomes.

Using predictive modeling will allow companies to look into the future and make predictions based on historical data analysis, pattern recognition and modeling.

This insight will help companies avoid risks, understand future customer behavior so that they can intervene as needed, offer proactive customer service, project losses due to a catastrophe and improve underwriting profitability.

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It is critical that insurers reduce losses and leakage to retain profitability. Better control of fraud is essential in accomplishing these goals.

Advanced tools analyze data (structured and unstructured) to identify fraudulent claims in real time at point of data entry. This will assist insurers in reducing losses that result in driving up operational costs, and may result in companies having to increase premiums based on these losses.

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These are among the newest interests among insurers. Inquiries from Gartner's p&c clients spiked in 2009, as many companies began to craft their social networking strategies for internal employees, agents and marketing.

Driven by increasing use of social networking among consumers and policyholders, leading-edge insurers quickly began to set up their own communities, monitor social-networking conversations, and create content for the network.

Social networking may possibly have a disruptive impact on the industry as it increasingly becomes a trusted source of advice among consumers.

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Interest in product development and configuration has been cyclical, with interest varying by year and region. One of the top business priorities among p&c insurers is improving speed-to-market for new products. Legacy environments make this task difficult, if not impossible.

New systems, such as product configuration, are needed to shift development to the business users, manage the product life cycle, support product testing prior to putting products into production, and facilitate product componentization to further help insurers with product bundling at the point of sale.

Their use will help drive down product development cost--but, more importantly, allow insurers to get products to market faster than their peers that continue to rely on legacy systems.

Furthermore, it will allow leading-edge companies to be product leaders that can create niche products in a cost-effective manner, respond quickly to emerging product needs and support on-demand customization of products.

o BPM Solutions, Including Workflow and Rule Engines:

Insurers have been using tools to help manage business processes for several years, but projects traditionally have focused on workflow without leveraging the complete capabilities in these systems.

To optimize processes, insurers are increasingly implementing new tools such as business rule engines and BPM solutions to help automate core processes, have an application development tool for new core systems, extract rules from legacy systems to make them more accessible, and aid in decision support in areas such as underwriting or claims adjudication.

BPM holds promise for insurance because it enables companies to model, analyze and test business processes independent of core systems. Process problems can be easily identified, and companies can manage process variety (offering various processes for a single task for different user groups).

BPM solution use will result in being more customer-centric, driving improved user experiences through the Web channel, faster transaction processing, staffing productivity improvements, lower cost of transaction processing, more consistent decision-making, improved risk management as well as improved customer service.

It is important to note, however, that ROI is directly related more to the process to which BPM is applied and how processes are optimized, rather than the technology used to support BPM.

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The Internet has become a core component of operations for personal and commercial lines insurers. It is a tool to interact with agents, consumers and policyholders.

The use of portal technologies for agents and policyholders is critical as a means to offer access to sales/customer service systems, corporate information and data.

Companies must ensure that these portals support full transaction capabilities and meet user needs, including having easy-to-navigate user interfaces, real-time data access, and straight-through processing for new quotes, policy issuance and customer service tasks (for example, bill presentment and payment, and first notice of loss).

Using portals for self-service for both constituencies will help companies drive down costs when there is adequate user adoption, while empowering users to conduct transactions themselves.

In addition to the portal, interactive Web technologies are also needed to improve the user experience. Chat, shared screens, callback tools and video graphics that simulate gaming are all tools that will help personal lines insurers improve interaction--especially with younger demographic groups.

Using Internet sites as an interaction and transaction tool will help companies reduce transaction costs, improve user experience and satisfaction, and reduce call center volume.

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Insurers are being confronted with the growing need to offer more services to agents and consumers through mobile devices--and demand will intensify during the next five years.

Younger generations are accustomed to using mobile devices as communication and interaction tools, using them for searching the Web, taking pictures, recording videos, checking account balances with the bank, text-messaging and other daily tasks.

Mobile technologies will provide p&c insurers with a great tool to equip their agents with real-time information and contacts.

Launching mobile applications is becoming popular, especially in the United States, for insurers that want to generate a new brand image and offer tools to customers for finding an agent or submitting a claim. Many companies have already launched applications for the iPhone for these activities, and companies in Europe are starting to do the same.

Kimberly Harris-Ferrante is a vice president and distinguished analyst at Gartner Research in Wake Forest, N.C. She may be reached at [email protected].