An Open Letter from FirstBest on the State of the Insurance Industry
Despite the current economic melt-down, capping off a soft market lasting over two years, the news is not all bleak. While no one will be left unscathed by the liquidity crisis, including the P&C sector that FirstBest serves, it is important to remember some key points.
P&C insurers are not facing the same pressures as banking and other financial services companies. While current conditions will drive more cost-consciousness and expense cutting, the need for productivity and profitability will ensure insurers' IT budgets will not face significant cuts. To combat the soft market, P&C insurers are continuing to focus on improving operational efficiency and productivity – which translates into additional technology spending for many forward-looking carriers.
There is ample opportunity to increase market share, especially for small to midsize regional carriers. Technology can help carriers level the playing field, improve business flexibility and agility, and bring new products to market more quickly to respond to the changing landscape.
In a new Novarica report, "US Insurers 2009 IT Budgeting and Planning Snapshot," Matt Josefowicz writes: "Even with the worst investment market crisis in generations and a paralyzing credit crunch, insurers are not turning away from needed technology investments. Technology remains a critical element of enhancing operational effectiveness and supporting growth strategies, both of which continue to have a larger impact on IT strategy than concern over business and investment conditions."
In our Reading List section below, you'll find our selection of some of the best recent articles and reports on the financial crisis and what it means for the commercial insurance business.
We hope that this newsletter will provide you with fresh insight on ways you can improve your ability to compete in today's market. As always, we welcome your feedback.
John Belizaire
CEO and Founder, FirstBest Systems
More Info on the Financial Crisis & Insurance: Sources
IT Is Standing on the Bridge With The Captain, Not Getting Jettisoned With Excess Cargo
Even with the worst investment market crisis in generations and a paralyzing credit
crunch, insurers are not turning away from needed IT investments. From a new October 2008 Novarica research report, US Insurers 2009 IT Budgeting and Planning Snapshot, available to Novarica clients.
S&P Says P&C Insurers Have Plenty of Capital
Despite a soft market, hurricane-related losses and the troubled economy, P&C insurers remain on solid ground since most have the capital to absorb their losses, according to a Standard & Poor's report issued on Oct. 14. From Business Insurance. Read more »
Insurance Technology Spending Unlikely to Shrink
While current conditions will drive intensified cost-consciousness, the need for improved capabilities, increased productivity and greater profitability will ensure that insurers’ technology budgets will not face significant cuts. From Insurance & technology. Read more »
Understanding Uncertain Times for Technology Vendors and the US Insurance Industry
The insurance industry is facing difficult times, but the sector is not undergoing a systemic crisis, due to regulations and sound portfolio management by the majority of players. From Datamonitor. Read more »
The Financial Crisis & the P/C Insurance Industry: Challenges Amid the Economic Storm
An Insurance Industry Institute summary of the federal government’s proposed $700 billion bailout plan, with a focus on its implications for insurers. From the Insurance Information Institute (III). Read more »
Will Insurers Spend More or Less in 2009?
As the financial crisis unfolds, technology vendors exposed to the insurance sector are asking one question: will insurers spend more, less or the same on technology in 2009? From Insurance & Technology. Read more »
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