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Features & Opinions
Insights into Insurance Modernization and Using Technology to Drive Annuity Sales
Lynna Goch, Best's Review: Welcome Eric. Please tell us a little about Infosys.
Eric: Infosys is a US$ 4 billion technology and business process outsourcing services company. We are based in Bangalore, India, with operations around the world. We have over 90,000 employees, of which 20,000 are based outside India.
Lynna Goch, Best's Review: Best's Review just completed a 'CIO wishlist' survey of Insurance Chief Information Officers. Eric, let us find out what you think of the top two responses to one of our questions: Rank your technology priorities in 2008-09. Our survey respondents came back with, maintain growth by investing in new business and underwriting solutions and the other choice was a more unified view of customer data.
Eric: It is interesting because these dovetail with what we are hearing from our client base. We work with global Fortune 200 insurers, and US and European insurers in the mid-market. We are hearing validation of what you got in your survey.
We have approached this business issue through our solution strategy. We develop frameworks and assets that we offer clients to address their business problems. Our leading insurance solutions are insurance modernization and rapid product innovation. They actually tie with the top two priorities that you have listed.
In the area of investing in new business and underwriting solutions, we are seeing that the US$ 3 trillion of legacy IT assets that the industry is dealing with, some of which are systems that have been around for 30+ years, there is a tremendous impediment to new product introduction as well as regulatory implementation. Any kind of M&A activity or business initiative that you want to pursue, there is always a constraint from the IT assets in the legacy organization.
Our approach to insurance modernization solution is to take a business capability, analytical approach. We decompose the business capability and only address the systems aspects to improve the business capability. It is very difficult to do a massive system replacement. Companies have hit the limit in terms of portals and front-ending. The large players have put finance on top of old systems to disguise some of the shortcomings.
Now, companies have to dig deeper to prioritize. When you try to effect an end-to-end business process for new policy acquisition, you have to look at the entire underwriting process up to policy issuance, and inter-customer service as a bare set of processes. You cannot address it fully with web frontend on top of legacy systems. You have to modernize some aspects of the existing systems, staying close to the process improvement that you want to achieve.
Lynna Goch, Best's Review: It sounds like a home owner who has a decision to make whether to add two or three bedrooms to the house or tear it down and start from scratch?
Eric: It is very difficult to tear it down and start from scratch. What I hear from CIOs and COOs is that tearing it all down and starting from scratch is not an option due to budget reasons and legacy products that cannot be easily moved. Particularly in life insurance, it will be very difficult to take that approach with the legacy portfolios that have been running for many years. There are regulatory as well as budget constraints. However, they go through this analysis for new product introduction. When there is a new product, especially when it is a significant departure from the core product that they have been running for a number of years, the analogy of 'adding some rooms vs. tearing down, starting over' definitely comes into play.
Lynna Goch, Best's Review: Data security must keep CIOs up at night. Why is this issue so hard to cure?
Eric: I thought we had a cure a few years ago when the Internet caused all the technology functions across industries to take a hard look at what they had in place at all levels of security; physical security, operating systems security, applications security. At each level, five-six years ago, people had a fairly solid approach to security and thought that it will hold for a while. What has happened in recent years is that the physical security aspect has proven harder to solve because of a couple of new developments.
The best way to summarize these new developments is the onset of increased systems mobility in the form of small handheld devices and cell phones that are able to carry extremely powerful applications and (offer) access to the data in the enterprise. The variety of devices and business partners that any enterprise has to deal with has magnified the data security issue.
The other factor that I see as a tremendous risk is portability of data storage and the need to revisit some of the data storage procedures and policies because in our industry, most - if not all - of the data breaches are not coming from the enterprise systems or public networks. They are happening because client data is on a laptop, disk or tape that is lost or stolen. The mobility and portability of storage need to be addressed for us to get greater consumer confidence in data protection and security as well as for CIOs to get some sleep at night.
Lynna Goch, Best's Review: A lot of the recent technologies do not seem like they go together. But I hear a lot about how technology can be used to drive annuity sales. Is this true?
Eric: What we have seen is that there is a tremendous proliferation of products. It is very difficult for a producer, especially an independent producer, to keep track of all the potential products that they can bring to market, to their client base. There is the educational and marketing aspect of producers and consumers being able to have ready access to all the options that are available to them.
The second great value of technology in the annuities area, with the tremendous explosion in variable and index-led products, is the ability for comparison shopping by consumers. If you have a good product, the consumers are going to latch on to it, and you are going to get a lot of free marketing. There are public information sources available on the Internet that did not exist five to ten years ago. They represent another marketing channel or a direct consumer channel that requires little or no investment over and above the services that you have to provide anyway through other channels.
The third aspect where technology can help drive annuity sales is the ability to shrink the customer service and policy administration lead times and costs. It enables the company to offer more products and provide better service because the cost of providing it can be reduced by very smart use of technology.
Lynna Goch, Best's Review: BusinessWeek ran a story on how IT is meeting the challenge of keeping data centers cool. What are the solutions for this problem?
Eric: There are a number of solutions that my clients are pursuing in that area. I see a lot of work being done in simplification/rationalization of their infrastructure, server consolidation, and intelligent application of storage technology that allows you to decrease the footprint of your data centers. A lot of companies have a green report card for their IT organizations to track progress. There is a remote computing trend that allows people to work from outside the corporate environment. It allows distributed processing power so that everything is not confined to a central computing base.
The technologies that hardware and network providers are bringing to market and workforce trends are the key enablers.
Lynna Goch, Best's Review: We have covered a wide range of tech topics in this podcast. Thank you for all of your insight, Eric.
Testimonials
“After carefully examining our options, Conseco selected Infosys for this strategic outsourcing initiative because we are confident that Infosys understands the rapidly shifting dynamics in the insurance market, and brings to bear deep technical skills in an innovative service model...”-Russ Bostick,
Executive VP and CIO,
Conseco
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