Market Focus: Insurance—Technology Helps Insurance Weather the Storm

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People can be stubborn, especially when it comes to protecting their assets and homes. When Hurricane Gustav struck major metropolises of Texas in early September 2008, regional evacuations were issued, but some mulish residents tried to hold their ground—ground from which they eventually had to be rescued, at great cost. During such chaotic and stormy times, insurance-company readiness is put to the test. Luckily, technological advancements—especially in the areas of business intelligence and geographic information systems—can alleviate the impact of the catastrophe, ideally by alerting people before disasters strike.

The idea that the insurance sector is a straggler in terms of technological innovation is a myth, according to Chuck Johnston, vice president of strategy and alliances for Oracle Insurance. “People pick on insurance for being a laggard industry, which is totally not the case,” he says, noting that the first insurance software broke onto the scene in 1963. Insurance companies are trying to keep up technologically, he says, but often have older legacy systems that take time to move away from.

Change, however, requires more than systems innovation, notes Gartner analyst Kimberly Harris-Ferrante. The technology is there, she says. Reordering the business model is simply more imperative.
In fact, many insurance companies flinch at the mere mention of anything called “CRM,” believing that traditional CRM overlooks vertical-specific needs. Many CRM vendors, however, have begun to develop customized solutions in an effort to prove they’re paying attention to insurance’s unique requirements.

“You have to have CRM combine with the transactional system,” Harris-Ferrante says. “What’s happened in [the] last two years is that…looking at the business process workflow…CRM vendors [have started] to combine CRM and insurance transactional technologies.”

In late September, Oracle introduced Oracle Insurance as a dedicated business division. The announcement came on the heels of two acquisitions: AdminServer, a life insurance policy administrator, in May, and Skywire Software, a provider of customer communications tools, soon thereafter. Once Oracle gets the integration right, Harris-Ferrante says, the company’s technology will be “plug-and-play with insurance applications, as well as finance, accounting, [enterprise resource planning], and also CRM.”

In blending CRM with insurance transactional software, Harris-Ferrante points out a trend surfacing around geographic information systems and proactive customer service. Geographic business intelligence (BI), for example, provides specific value for insurance, she says, with much of the current momentum centering on underwriting. “When you apply for a policy and say, ‘I live at 545 Main Street,’ they can look at Main Street and look at risk associated with that area: ‘Are you on a flood plain?’” Underwriters can see their exposure in a particular region and the risk involved with taking on additional properties.

At this year’s Teradata Partners user conference, Kathy Koontz, director of marketing data management at Nationwide Insurance, demonstrated benefits of geographic BI within insurance CRM by showing how the technology can drive business results—in advance of disasters. “When storms are coming, we can see which areas will be affected,” she told the crowd. “Even three days before, we can start using [geographic BI] reports to see which insurers are in that county.” It’s all about turning knowledge into action, she said.

So if such capabilities are out there, why aren’t all insurance companies jumping to implement them? “The challenge is not the cost of the technology,” Harris-Ferrante says. “It’s that it hasn’t been a priority. A lot of data is…in legacy systems.” Changes within an insurance company first need to be foundational, she says, adding that the industry as a whole needs to move beyond after-the-fact efforts.

“[What’s] very innovative [is] to not be just responsive,” she says, “but to be proactive and be more outreaching.”

Perhaps the wind of innovation can blow strong enough to make handling the next hurricane a breeze. 

SIDEBAR: Top 3 Vendors in Business Intelligence in Insurance

  • SAP (Business Objects)
  • SAS
  • SPSS

Source: Gartner

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