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Sometimes, All that Glitters Is Gold

Robert Regis Hyle | October 11, 2016

Here are six words you rarely hear when an insurance carrier CIO sits down with his boss, the CEO, and discusses the proposed budget for next year: “How much money do you need?”

The largesse that we would all like to see is rarely found inside corporate walls, but some strides are being made. One reason for this is the IT department is now viewed as strategic part of the company. Gone are the days when “keeping the lights on” or “keeping the trains running on time” are the sole functions of IT.

The direction for insurance companies has changed slowly over the last decade, but the pace of change today is downright alarming. A study of the budget process conducted by Karlyn Carnahan of Celent shows that the industry has finally made enough headway in the replacement of legacy systems that now many carriers can place a significant portion of their budget—some are at even more than 50 percent—on technology that can transform the company.

The industry is abuzz with the discussion of insurtech and what capital investments can do for a carrier—and this magazine is no exception. Once upon a time there were stories about CEOs being distracted by shiny technology objects, but in today’s world the objects being developed are more transformative than at any time in the history of insurance technology.

Interest in in new technology should not be confused with investment, though. The vast majority of insurance carriers in this country are small and do not have the budget to compete with the billions being thrown at issues by Tier 1 carriers. That doesn’t mean the smaller carriers don’t care or are uninterested. The fact is, they are wise enough to know that someday—probably sooner rather than later—the technology drift will come their way and they need to understand how it will fit in their strategy.

Meanwhile, we can all look on and marvel at what is happening in the insurance industry. Corporations within and from the outside are looking to invest in insurance companies and some of the solutions that will make a difference in how the industry looks in a few short years.

Many people believe the transformation in insurance has been a huge development, but when you consider what is driving much of that transformation—insurance customers themselves—we should not be surprised at all that the pace will not slow down. It will only quicken.

That is both scary and exciting, but most of all it bodes well for the future of this industry.

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The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.


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