Invariably, our discussions on all these topics moved to the practical: how to align business objectives to capabilities and IT projects, and how to be more successful in the implementation of key initiatives.

Policy, Claims, and Underwriting Are Resurgent

Given their fundamental role in every insurance enterprise, core systems always receive a high focus at these industry conferences. More than 50 percent of IT spending is still allocated to these workhorse systems, so it is not surprising that many sessions, vendor booths, and meetings were focused on these areas.

Related: More Tech-Related Blog Posts from SMA

During the last three years, many insurers have been reluctant to initiate and invest in a major upgrade or in replacement projects. Now as the economy improves and latent demand kicks in, numerous insurers are considering new policy systems, increasing investment in underwriting automation, and enhancing claim systems. IT-solution vendors offering products in these areas are busy with implementations and responding to insurers that are in evaluation mode. Already in 2011, there is an uptick in new core-system launches, and our outlook is for this trend to continue for the near term.

Advanced Technologies Are Making Their Mark

At both conferences, everyone wanted to discuss social media, mobile technologies, and advanced analytics. Almost every insurer we spoke to wanted to know what their peers are doing, what the leading-edge implementations are, and how to begin or accelerate their own plans. There is clear recognition that these technology trends are changing the game and that the social/mobile/analytics wave is sweeping over insurers whether they want it to or not.

SMA's assessment is that most insurers are in an accommodation and/or experimentation phase—enabling technology platforms to support mobile devices, supporting popular horizontal apps, testing the waters on social media, and developing strategies for how to capitalize on data and analytics. While there clearly are great examples of how insurers are leveraging these advanced technologies, they tend to be few and far between. Most insurers are trying to understand the potential, assess what peers are doing, and put together schemes for future implementations.

The Customer Is the Ultimate Driver

In considering investments to enhance/replace core systems or investments in advanced technologies, the ultimate driver is the quest for profitable growth. That profitable growth hinges on customers and meeting their demands for products, services, and communications. The fundamental requirements for attracting, retaining, and impressing customers are growing in scope and complexity as customer expectations change. The new customer demands have created an evolving set of requirements and IT solutions that span the enterprise. Players in this space are in acronym heaven—CCM, ECM, BPM, and CRM—to name a few.

Alignment Is the Key

SMA sees the key take-away from these two conferences to be the evidence of renewed enthusiasm regarding the potential for IT in insurance. New initiatives are kicking off. The solutions marketplace is robust and very competitive. Advanced technologies hold much promise, but are still nascent in many ways.

Conversations we had on these topics with insurers consistently led back to the business strategy. How do we make sure our business strategy drives the requirements for specific capabilities? How do we make sure our IT investments deliver those capabilities? How do we ensure business and IT alignment so that our investment priorities and decisions are a natural outgrowth of the strategy? How do we establish a system of IT governance that manages investments and projects over time to successful completion?

Overall, there is lots of activity for insurers and IT providers alike. Many felt positive about being involved in the upswing of the business. As always during these periods, there is the potential for misalignment, haphazard investments, and failed projects. Our advice? Stick to the basics of the business and take a disciplined approach to determining the investments and solutions that will yield the most business benefit.