Microsoft to Keep Pace with Carriers’ Shift to Strategic IT

The insurance industry has not been drastically cutting IT spending as some have predicted but rather seem to be taking a more strategic look at their IT investments. The goal is a leaner and smarter enterprise that will be in a stronger position to compete for those customers that want more tip of the finger services. Windows in Financial Services speaks with Microsoft Financial Services Sr. Architect Colin Cole about his thoughts on the sector and how much activity we can expect to see this next fiscal year. WFS: Tell us about some of the latest developments in Microsoft’s Insurance Value Chain Architecture Framework. Cole: Last year, Microsoft announced our Insurance Value Chain Software Factory for ACORD standards. The SF helps insurance companies work with ACORD standards on the .NET platform. The SF has been successful and we believe it is necessary to improve it and continue it forward. Microsoft has plans to address the new standards from ACORD such as AMS and the upcoming ACORD Information Model. Additionally, we intend to innovate IVC along the lines of cloud computing and our Azure technology platform. We are not making any formal announcements this month, but we are planning some very slick demonstrations for the ACORD 2009 conference in Orlando, such as showing customers how they can improve agent/broker scenarios, underwriting, hosted solutions and cloud computing, asset-side investment solutions as well as CRM.  WFS: What would you say are the greatest near-term/long-term difficulties facing insurers and how do you see them affecting insurance companies’ technology strategies? Cole: Given the difficult market conditions the insurance industry finds itself in today due to large CAT and equity management losses, we believe updated claims and underwriting solution areas are critical, particularly as underwriting standards become more stringent. Specifically with underwriting, we see another uptick in the need for STP solutions that drive out the inefficiency, or identify the inefficiencies, and integrate with business rule engines. We’re also seeing demand for increasing the efficiency of underwriters such as by pre-filling fields with known third-party data (especially with commercial P&Cs) and shortening the time-in-application. Rich Internet technologies such as Silverlight also are really taking off in insurance as they provide the slick next-generation user experience, but work over the Web and cross platform, which is very important when dealing with large underwriter networks and independent agents, and subsequently, Web-based deployment. WFS: Where do you see the focus being for 2009? Cole: Underwriting and claims are expected to be large focus areas. However, given the social networking phenomena taking place around the world, we will see insurance companies trying to integrate with the likes of Facebook/MySpace and upgrade their consumer facing Web sites to include social networking concepts.  WFS: What is Microsoft’s plan in these areas? Cole: Microsoft has great technologies to help with improvements to claims/underwriting and social networking. We have partner solutions for claims used by some of the largest carriers in the United States. For underwriting, we have our Microsoft Office SharePoint Server product that allows companies to quickly build human workflow solutions to coordinate underwriting operations, as well as the Silverlight user experience technologies. As companies look to drive down costs given the current economic conditions, Microsoft is coming up with tremendous new ways to help. Microsoft announced its Azure platform, a cloud computing operating environment, which will provide a new capability for companies to build new software that can be hosted in Microsoft data centers for reduced costs, or move some existing applications to the cloud. Microsoft has a detailed plan of how we can help insurance companies save money in this tough environment. WFS: What would you say are the key lessons learned in the area of enterprise risk management? Cole: It’s a little early to make sweeping generalizations, but clearly insurance companies didn’t realize their dependence on a healthy credit market system – until the credit market went south in historic fashion with insurance companies holding onto some of the bad securities (CDO’s, etc). The effects of the credit downfall have affected insurance indirectly, so clearly insurance companies have learned some risk lessons.  WFS: Do you see M&A activity being big this year? What are Microsoft’s plans to support this? Cole: The general feeling is that the state of the economy will drive out some of the weaker players and result in an uptake in M&A. Yes, we believe this will be an important factor in IT decisions of the next fiscal year. Technorati