Many insurers are looking to drive operational efficiencies by bridging the gaps in their resource capacities and hiring talent with knowledge of emerging technologies. Insurers are facing several staffing challenges, including retiring Boomers, who take institutional knowledge with them as they leave.
The Advantages of IT Services
IT services providers offer IT departments an opportunity to deliver technological and market-competitive advantages by augmenting existing people, processes, and technology in-house. Blending internal and external resources continues to become more acceptable in the industry, especially for midsize insurers.
Another benefit for insurers considering IT services firms is the strategic partnership between services firms and InsureTech vendors. These relationships provide options to test new technologies in a low-risk manner and gain exposure to thought leadership. If these experiments prove useful, insurers can quickly operationalize these investments by utilizing service firms’ best practices.
Best Practices: Evaluating Experience, Proximity, and Track Record
Selecting the appropriate IT services partner should be done carefully. The following points are good places to start for insurers looking to find their match:
- Consider the depth and breadth of insurance expertise. Effective project implementation is important for insurers. In turn, finding a partner with domain expertise can be critical to mitigate risks and facilitate the exchange of knowledge. Leadership and team expertise can be a strong differentiator, especially when a project is particularly risk-averse (e.g., financials).
- Evaluate the vendor’s access model and location of resources. Services providers, like insurers, have different maturities in their processes. Services providers with robust processes and substantial documentation could utilize dispersed employees, while less mature organizations will likely benefit from a co-located approach.
- Assess the vendor’s track record. Insurers should closely examine a potential partner’s track record to ensure that it aligns with the organization. Some services providers may specialize in particular efforts. In turn, insurers should decide if the partnership is long-term and strategic or more tactical. Assessing the culture of the services provider and making sure it aligns to the insurer’s is an important element to success, especially in strategic engagements.
Insurers are responding to an everchanging marketplace, which is subject to new consumer demands and regulatory shifts. IT services providers offer insurers an opportunity to leverage additional resources alongside their full-time staff and to gain exposure to new technologies and best practices.
For more on the marketplace, read Novarica’s report, IT Services Providers for Insurers.
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