We all know that insurance is hardly on the cutting edge of technology, but why would we be surprised at that when, for the most part, insurance companies don't trust technology vendors?
This fact has become abundantly clear to me in my 10 years in this industry, having come from the technology industry itself. And given the history of technology in our industry, it makes a lot of sense that insurers would look askance at tech vendors.
Ironically, insurance was at the vanguard of technology when it began adopting mainframe technology in the 1970s. The problem with that, as we have noted elsewhere, is that mainframe technology has worked all-too-well in our data-intensive environments.
If it's not broken, we're not going to fix it. New and innovative technology sounds risky to us, and we know a thing or two about risk in this industry. So now someone comes along and wants to sell us something that will involve ripping out our tried-and-true systems and replacing them, and re-training our people--all at a considerable cost to us in time and money.
To the industry, this sounds like so much snake oil. Is it any wonder we would not trust those who promote such cure-alls?
Yet some of us, at least, know deep down in our hearts that there are new and better ways to do things--and some of those ways don't involve ripping and replacing our systems. So what are we afraid of? Why does the thought of another product demo give us the heebie-jeebies? What have tech vendors done to us that makes us feel this way about them?
Yes, I know, things like CRM fell flat in our industry, but whose fault was that, really?
What are your thoughts? Why the mistrust, and what can we do about it?
Comments (3)
Mistrust may be a part of it, but there is another aspect that I have long suspected, and seen nothing that has convinced me otherwise.
I believe that has to do with insurers not wanting to make any move toward SEMCI, for the simple reason that they don't want to see insurance further commoditized, and made even easier to "shop around."
Any major changes they make would almost have to incorporate SEMCI, since it's been requested for years and certainly the technology to implement it now exists in mature form (xhtml/xml).
But instead we still have to rely on multiple outside vendors to design programs that try to cobble together the idea of SEMCI. Although great strides have been made in this area, the whole thing ends up being a Rube Goldberg kind of setup that is not as efficient or reliable as it should be.
But then, that's really another part of the transparency discussion that is quite pervasive in our business right now, including Sam Friedman's latest posting about media being excluded from conferences.
Posted by Aaron Stein | December 6, 2007 6:30 PM
Posted on December 6, 2007 18:30
The credibility of established industry vendors has taken a hit by the number of early-stage technology and BPO companies over-promising on both capabilities and delivery.
The 1st filter for all P&C carriers should be the presence of an established roster of P&C carrier clients, with easy-to-understand (and ideally published) business results resulting from these engagements.
Too many technology companies also try to use carriers' software license fees--and follow on fees--to underwrite their organic software development roadmap. The true leaders in the space--who are investing heavily in their core claims and policy areas--are ahead of the carriers, due to their collective internal IP and array of client experiences which typically surpass any one organization's vision of the "future of technology."
Posted by Greg Powers | December 11, 2007 7:02 PM
Posted on December 11, 2007 19:02
Ara,
My feedback to your question is from the life and annuity segment of the market and my 20 plus years of experience in the insurance industry. The primary reason that carriers do not trust technology vendors goes back to the late 1980s and early 1990s when approximately 200 large insurance companies signed contracts with a few vendors to develop the “next generation” of policy administration software to replace the then current legacy systems. Without exception, the vendors failed to deliver on their promises and the industry quietly swept the mess under the carpet and went back to doing their own work on their old systems. The internalization of all systems work became the norm for the industry and projects became tactical efforts to extend the life of the mainframe legacy system(s).
Over time this has become a big part of the industry’s inherent risk adverse culture. Eventually, as the industry struggles with new insurance product development and their high cost of ownership models, future management will have to make some tough decisions about their ability to catch up to newer systems or outsource to stay competitive.
Posted by Ric Young | January 7, 2008 4:05 PM
Posted on January 7, 2008 16:05