To the Future and Back: Technology in Risk Management

Article excerpt

The beginning of a new year spurs resolutions, predictions and reorganization. Often, it brings opportunity for change - "out with the old and in with the new." What will be new in the risk management industry?

A continuing trend to watch is the use of technology. Ask any broker, claims representative or risk manager how new tools and technological advancements have affected their company and what they foresee for the future, and you are likely to get a wide spectrum of answers.

Such was the case when Lawrence G. Brandon, executive vice president of the American institute for CPCU and the Insurance Institute of America, surveyed risk managers, company executives, brokers and academics for his book, "Let the Trumpet Resound - the Insurance industry in the 21st century." In the chapter Automation and Technology in Insurance and Risk Management," Mr. Brandon examines the evolution of these areas and shares industry experts, reflections on their businesses before automation and their predictions for the future.

According to survey results, organizations must continue to pay close attention to their information systems. "Technology will become a necessity, not a competitive advantage. Lack of capital to invest in technology will force many players out of insurance company and agent/broker ranks," says one broker. "The information highway and electronic data interface will have a huge impact on how insurance is conducted and how risk management services are provided," adds another respondent.

The value of technology and the need to move forward is no longer a subject of debate, although its implementation in the insurance industry began on shaky ground.

The Past - an Urgent Call for Action

Many perspectives on the post-technology era are negative - agents blamed insurers, who in turn questioned the value of technology. Most were dissatisfied with the actions and inaction in this area, as evidenced by the following survey responses:

"Insurance carriers set the industry back a decade by electing proprietary systems in the late 1970s and early 1980s. Now it all has to be redone, costing millions of dollars." "Pleas from agents for an integrated system fell on deaf ears. The resulting ramifications of the proprietary thinking of company 1980s have been enormously costly. It was a strategic and costly mistake."

Not surprisingly, company Executive decision makers during this time - did not reference past mistakes, says Mr. Brandon. In the present time of exploding technology, industry executives are optimistic, eagerly anticipating the changes promised years ago.

Although we are increasingly reaping the benefits of technology, our industry collectively has not reached the level of automation of other industries, including banking. …