A couple thousand insurance and IT professionals justparticipated in the annual ACORD LOMA and IASA conferences—numbersthat were greater than 2010. These mid-year events typicallyprovide an interesting glimpse into the major themes for ITstrategy and investment among insurers and a look at what is on thedrawing board for the next wave of projects.

SMA spoke with hundreds of insurers and vendors at both events.A few clear messages emerged from these interactions.

A dominant theme we observed was the balance and the tensionbetween the new, innovative, and exciting projects versus themainstream, core, workhorse-type projects. While there isconsiderable excitement and buzz around social media, mobiletechnologies, and advanced analytics, we sense a significantresurgence in activity around core policy administration,underwriting, and claim systems.

As the industry continues its slow evolution to acustomer-centric environment, initiatives of both types are beingdriven by the needs of the customer. Evolving customer demands arespawning new business requirements and more sophisticated ITsolutions that span the entire enterprise, integrate with coresystems, and leverage advanced technologies.

Invariably, our discussions on all these topics moved to thepractical: how to align business objectives to capabilities and ITprojects, and how to be more successful in the implementation ofkey initiatives.

Policy, Claims, and Underwriting AreResurgent

Given their fundamental role in every insurance enterprise, coresystems always receive a high focus at these industry conferences.More than 50 percent of IT spending is still allocated to theseworkhorse systems, so it is not surprising that many sessions,vendor booths, and meetings were focused on these areas.

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During the last three years, many insurers have been reluctantto initiate and invest in a major upgrade or in replacementprojects. Now as the economy improves and latent demand kicks in,numerous insurers are considering new policy systems, increasinginvestment in underwriting automation, and enhancing claim systems.IT-solution vendors offering products in these areas are busy withimplementations and responding to insurers that are in evaluationmode. Already in 2011, there is an uptick in new core-systemlaunches, and our outlook is for this trend to continue for thenear term.

Advanced Technologies Are Making Their Mark

At both conferences, everyone wanted to discuss social media,mobile technologies, and advanced analytics. Almost every insurerwe spoke to wanted to know what their peers are doing, what theleading-edge implementations are, and how to begin or acceleratetheir own plans. There is clear recognition that these technologytrends are changing the game and that the social/mobile/analyticswave is sweeping over insurers whether they want it to or not.

SMA's assessment is that most insurers are in an accommodationand/or experimentation phase—enabling technology platforms tosupport mobile devices, supporting popular horizontal apps, testingthe waters on social media, and developing strategies for how tocapitalize on data and analytics. While there clearly are greatexamples of how insurers are leveraging these advancedtechnologies, they tend to be few and far between. Most insurersare trying to understand the potential, assess what peers aredoing, and put together schemes for future implementations.

The Customer Is the Ultimate Driver

In considering investments to enhance/replace core systems orinvestments in advanced technologies, the ultimate driver is thequest for profitable growth. That profitable growth hinges oncustomers and meeting their demands for products, services, andcommunications. The fundamental requirements for attracting,retaining, and impressing customers are growing in scope andcomplexity as customer expectations change. The new customerdemands have created an evolving set of requirements and ITsolutions that span the enterprise. Players in this space are inacronym heaven—CCM, ECM, BPM, and CRM—to name a few.

Alignment Is the Key

SMA sees the key take-away from these two conferences to be theevidence of renewed enthusiasm regarding the potential for IT ininsurance. New initiatives are kicking off. The solutionsmarketplace is robust and very competitive. Advanced technologieshold much promise, but are still nascent in many ways.

Conversations we had on these topics with insurers consistentlyled back to the business strategy. How do we make sure our businessstrategy drives the requirements for specific capabilities? How dowe make sure our IT investments deliver those capabilities? How dowe ensure business and IT alignment so that our investmentpriorities and decisions are a natural outgrowth of the strategy?How do we establish a system of IT governance that managesinvestments and projects over time to successful completion?

Overall, there is lots of activity for insurers and IT providersalike. Many felt positive about being involved in the upswing ofthe business. As always during these periods, there is thepotential for misalignment, haphazard investments, and failedprojects. Our advice? Stick to the basics of the business and takea disciplined approach to determining the investments and solutionsthat will yield the most business benefit.