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7 Keys to Insurance Tech Leadership

State Street research finds that insurance companies are generally behind where they want to be in digital customer interaction.

Insurers want to make the necessary technology investments to grow their businesses, but remain hampered by legacy issues within their IT departments and corporate cultures, according to State Street's latest Vision paper, "Platforms for Growth: Technological Innovation in the Insurance Industry."

The 321 insurance executives who responded to the survey understand the pressing need for innovation, but only 28% say their technology strategy is "completely aligned" with their business priorities. The major barrier, according to the group, is legacy systems: 86% cited that as a challenge to innovation.

Ian Cohen, group CIO of the insurance broker Jardine Lloyd Thompson, told State Street that insurers "have fixated about integration and have forgotten the virtues of interoperability… It’s easier and more cost-effective now to exchange information between, or extract information from, disparate systems than to fix back-office legacy systems in the vain hope of trying to integrate them with something else.”

[Novarica research reveals insurance tech budget priorities]

And while insurers are making heavy investments in data-driven customer interaction technologies, they currently rate their expertise with these platforms as average. Fifty-four percent say they are "somewhat effective at turning multiple data sources into actionable [sic] insight." That comes as more than 50% of insurers say they are planning to invest in one or more of CRM systems, social media tools, or technologies to capture new customer insights, like telematics.

The issue may be cultural, State Street found. Non-technology staff consistently rated the IT departments lower than self-assessments for flexibility, innovation, and strategic alignment. To that end, State Street recommends the following steps for insurers to achieve technological leadership:

  • Recruiting CIOs and other senior technology managers from outside the insurance industry (especially from "previously disrupted" sectors), to bring in new ideas and help to accelerate cultural change
  • Hiring data specialists in from other industries, to provide new ways of analyzing insurance data and generating insight
  • Prioritizing data visualization because, when it comes to analytics, visualization is almost as important as the analysis itself
  • Striving for interoperability rather than integration of systems to ease legacy modernization pains
  • Exploring the cloud and investment in new businesses as other means of innovating outside of the core legacy systems
  • Leveraging external data to help to overcome data silos within the company
  • Increasing the coordination of technology strategy between the asset management and customer-facing sides of the business

[Do you aspire to the C-suite, or some other spot in upper IT management? Then bulk up your credentials around today's most pressing IT movement, digital business, at the InformationWeek IT Leadership Summit.]

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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KBurger
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KBurger,
User Rank: Author
10/6/2014 | 3:45:53 PM
Re: Culture problems
Absolutely. It can't be about being trendy or jumping on the latest bandwagon. True, to find some emerging skill sets around digital, cloud, etc. -- it may be necessary to look outside the industry. But that also points to the importance of developing these kinds of skills and capabilities internally -- whether through lower-level hires or by training/coaching existing employees -- so that there is bench strength and also growth opportunities in the cool/hot areas.
Nathan Golia
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Nathan Golia,
User Rank: Author
10/6/2014 | 3:41:27 PM
Re: Culture problems
When making CIO hires — or any hire, for that matter — companies have to think hard about what they want their culture to be and be sure they understand how that person fits. Otherwise, you risk getting on the CIO (or CMO, or CDO) carousel.
KBurger
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KBurger,
User Rank: Author
10/1/2014 | 4:48:39 PM
Re: Culture problems
It's certainly not a new concept -- there have been calls to bring in CIOs (and other C-level) from outside the insurance industry (or from outside banking, or from outside capital markets, or whatever industry) for years. But "outside perspective" will not in and of itself make for a successful CIO. In fact, I wonder if someone from outside insurance would come in with an attitude that "insurers are backwards, it will be easy to get the to 'see the light' and change" -- when in fact there are complexities and issues that make this easier said than done. I'm just saying that it's probably more about leadership, business insights, technology expertise, etc. and that matters more than whether or not the executive is from inside or outside the industry.
Byurcan
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Byurcan,
User Rank: Author
10/1/2014 | 2:29:46 PM
Re: Culture problems
Yes, it's definitely becoming a trend for financial service co's to look outside the industry to bring on leaders, who may have new and innovative ways of tackling problems.
Sadie!!!
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Sadie!!!,
User Rank: Apprentice
9/30/2014 | 5:54:49 PM
Test
Test
Kelly22
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Kelly22,
User Rank: Author
9/30/2014 | 4:11:29 PM
Culture problems
Interesting that the first two points address looking outside the industry for employees to address the data and culture-related issues that insurers are facing. Those from "previously disrupted" sectors could bring some fresh insight on the troubles insurers are having today. 
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