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Management Strategies

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CIOs Prepare to Implement Growth Strategies

After two years wandering the desert of financial malaise, insurance carriers are looking to their CIOs to drive strategies that prepare them to grow in a consumer environment that increasingly demands innovative, real-time solutions.

After nearly two years, prognosticators are beginning to declare that the economic clouds that have covered the insurance business -- and just about every other industry vertical -- are clearing. Despite the fact that the country continues to struggle with persistent unemployment, most observers believe a tepid economic recovery is under way.

"Most companies have a sense of having gotten through the worst of it," says Matthew Josefowicz, director of insurance at consultancy Novarica. "[Companies] know where the bottom is -- it's not going to get any worse -- and [are planning to] go out and steal share from people who are not as prepared."

According to Josefowicz, various industry sectors face different realities as the dust settles. The P&C side, he says, is being "hammered" by price pressure and competition. Meanwhile, life companies face a public that is more averse to investing than ever before. "Some life companies are seeing this as an opportunity to take share from older companies that can't adapt," Josefowicz notes.

Catalyst for Change

In this recovering market, insurance carriers increasingly are looking to their CIOs to provide more strategic leadership and keep costs down while encouraging growth, asserts Jamie Yoder, managing director of the insurance practice at Diamond Management & Technology Consultants. "There's more of an emphasis on the CIO as the innovative driver. Carriers are looking for people who can get a lot out of IT efficiency and effectiveness -- and drive more growth of the business," he says, adding that insurers are looking for CIOs who understand consumers' service expectations and preferences.

"Customers are using information and technology very differently," Yoder explains. "There are differences in buying behavior and delivery, as well as how products and services are found. The CIO ... [has] to see across the organization and balance those things."

Balancing the need to evolve carriers' existing infrastructures to meet these new demands with the need to develop innovative solutions, however, can be difficult for CIOs, according to Yoder. "They're trying to build out of a very sizable legacy environment. If they're having to spend so much time building the efficiency and getting the tech environments up to pace, they'll lose out on being a key agent in terms of driving the business design changes that are happening," he explains.

"You can't be seen as a barrier to the innovation; you have to be a catalyst," Yoder continues. "How have you helped move it more quickly?"

One way effective CIOs are promoting innovation is by applying emerging channels to foster enterprise collaboration, according to Karen Pauli, research director for insurance at TowerGroup. By leveraging social media and mobility strategies, workers can quickly spread best practices across lines of business and office locations to improve all aspects of the enterprise, she indicates.

"When I worked for carriers, I led IT development projects by putting together a task force, and it was a three-week process just to get that together. You can't conduct business that way anymore," Pauli explains. "It's got to be real time. When you have a great idea at 3 a.m. and you want to share it, you can put that out there to whatever communities you've developed, and by morning you've got people giving you ideas on how to deal with it."

Next-Generation Collaboration

And by getting out ahead of the curve with collaboration technologies, Pauli adds, CIOs can prevent headaches down the road -- after all, generational turnover is only going to encourage more collaboration in this way, she says. "If you're going to bring in workers under the age of 30, that's how they think," Pauli explains. "It's better to set it up internally versus letting everybody create offline, unsanctioned communities -- which they will naturally do."

The growing use of collaborative technologies in the enterprise represents a larger trend, according to Pauli: Good CIOs increasingly are taking their cues from the consumer world, which is influencing the insurance business in more ways than just marketing, she contends. "That's very uncomfortable for carriers," Pauli admits.

"Carriers have got to start employing analytics to assess what's happening out there in the consumer world so you're able to sift through multiple sites and areas of information and aggregate it so you can change your business processes," she continues. "It's not just marketing; it's about product and price."

Silver Lining at the Core

While insurance carriers finally are looking toward the future as they emerge from the recession, many vendors already were looking forward during the difficult times. An underreported consequence of the economic downturn, according to Craig Weber, SVP of the insurance practice at Celent, is that vendors were able to focus inward on research and development of new solutions.

Tech providers have had the time to respond to concerns from CIOs, especially in terms of out-of-the-box functionality, Weber relates. As a result, CIOs now are more confident that they can update their core systems and are increasing spending in those areas.

"There was definitely, overall, a slight hesitation in the market" to upgrade core systems, Weber says. "We spent a couple years in a holding pattern, and that wasn't such a bad thing, actually. Now that insurers are back in the spending mode, the amount of choice out there is very good, and that bodes well for the success of these projects."

But it's not just about being armed with a budget increase and grabbing solutions off the shelf, Weber cautions. Effective CIOs need to blend vision with effective delivery, he notes, stressing that it's not just about having a single, huge idea -- as long as you are very effective at implementing your small ideas. In a growth environment, especially after a major downturn, companies and employees are looking to their CIOs to demonstrate leadership above all else.

"When you walk into someplace where an Elite 8 CIO is doing their thing, there's a level of excitement and passion for effective use of technology," Weber acknowledges. "That's how you recognize a job well done."

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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