Gartner warns insurers not to focus on different tech strategies in isolation

Information technology executives at insurance companies are working on strategies for mobile computing, social media services like Facebook, cloud computing and the increase in the volume of data, but a computer research firm suggests chief information officers need to consider how these strategies will affect one another.

“Most insurers have focused on – and built strategies around – each of these forces in isolation,” according to a recent report from Gartner Inc. of Stamford, Conn. “However, pairing two, three or even four of these forces will ultimately allow P&C and life insurers to innovate (including support of new insurance products), obtain new data in ways not previously possible.

The report, titled “The Nexus of Forces Supports Industry Transformation, but Insurers Are Not Ready to Seize the Opportunity,” refers to four information technology and telecommunications trends.

Cloud computing, which essentially means using another company or department’s server to host one’s data or software, is one force. The others are mobile computing, social media (including web services such as Facebook and Twitter) and information, which Gartner described as “a way to improve intelligence and decision accuracy.”

By viewing these forces in combination, the report suggests, companies could support additional functions such as the use of mobile devices to get real-time telematics data hosted by cloud computing providers.

“Gartner projects that the Nexus of Forces will help drive industry transformation and open the door for new business models within the insurance industry,” according to the report, written by Kimberly Harris, a Wake Forest, N.C.-based vice-president and distinguished analyst for Gartner.

“Insurers will be able to enter new markets and expand product lines to extend their reach beyond their current customer base, as well as better compete in their local markets.”

The nexus of forces, she added, “will call legacy systems into question among insurers, and may be the tipping point for legacy modernization for those previously unable to support system overhaul or replacement.”

For example, she suggested, chief information officers for insurers may need to start initiatives to make their websites work on mobile devices. Furthermore, she added, existing data warehouses and business intellgence systems may not be able to support additional data from mobile devices or from third parties in areas such as pricing and risk selection.

“The only way organizations can reap the full potential of the Nexus of Forces is to evaluate each force independently and in combination for business process impact, and to forecast how users (including customers and distributors) will drive much of this change as their expectations evolve,” according to the report. “Identifying the impact on customer-facing channels, products, data privacy/security, operation efficiency, speed to market, customer centricity and agent connectivity is essential.”