Who’s Using IT Well? Celent Report Profiles “Model Insurers”

Can insurers ever get their technology just right? They can, according to a new report that singles out companies that are hitting the mark with their IT practices.

After examining how U.S. insurers are approaching claims, distribution and product design—among other factors—Celent identifies those with best practices in key IT functions in its latest report, Celent Model Insurer 2010.

The report outlines the kind of strategies that give the top insurers– including Allianz Life, Erie Insurance Group, Farmers Insurance and Nationwide—good outcomes, assessing their IT processes in the following areas: distribution management, claims, infrastructure, IT management, policy administration, underwriting, service and product design.

“One common theme for many of the projects profiled in this year’s report is the emphasis on top-line growth," says Mike Fitzgerald, a senior analyst at Celent’s Insurance group and the report’s author. "Insurers are looking to technology to enter new markets, or to address new segments within existing ones."

Similar IT Best Practices

What else do the so-called “model insurers” have in common?

No matter which area they excel in, all the IT leaders “demonstrate a number of similar elements, a cross-section of best practices and quantifiable gains common across all model projects,” the report states. For example, using industry standards, which leads to higher productivity and lower staff expenses; optimizing infrastructure, which can result in increased revenue; or improved use of channels, which leads to better document or content distribution. Other overlapping best practices include automation and system integration; risk management; end user feedback; data transparency and use of metrics.

Better analytics

In one case, Farmers Insurance used data analytics and predictive modeling to create a new model of distribution management. The company had discovered that 20% of its customers provided 80% of the revenue, and launched the analytics effort to understand their best customers, attract and retain the best customers, and understand how their top agents worked.  In examining the customer relationships, longevity and cross-sell possibilities—along with top agent techniques—the company was able to boost its ROI in direct marketing by 14%.

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