HING KONG, CHINA: The insurance and financial services industry is at a crossroad. A volatile economic condition with recent financial crisis is changing competitive landscape in insurance industry with a challenging future ahead.

Technology initiatives undertaken by insurance companies will be affected by shrinking profit margins, saturated markets, and ongoing financial crisis. In addition to fulfilling ever-increasing business challenges like business process cycle time reduction, customer retention and increase in satisfaction, insurance companies are forced to reduce over all operational cost, personalise solutions, detection of fraudulent claims, enabling straight through processing by integrating customers, agents, brokers, third party service providers.

The global financial crisis lands an acute challenge on the table for insurers in Asia, as it is the only place in the world having room to maneuver for active economic policies. Increasing process efficiency will be the highest priority for insurance industry CIO’s.

The competitive pressures will also drive the need for innovation in Internet and mobile applications as well as the replacement of legacy applications. Underpinning these changes will continue to be a drive toward service-oriented architecture (SOA) for internal integration of systems, usage of services firms for transformation, and greater focus on process standardisation.

Siva Kumaran – group CEO, FirstApex, said, “Current economic conditions provide an opportunity for insurance companies to achieve sustainable cost reduction. While IT budgets may remain flat, technology must play a role in achieving greater profitability through core business operations.

This means underwriting for a profit, processing at the right unit costs per transaction, and pursuing smart and tactical growth opportunities, both organic and inorganic. The market will separate the winners from the losers: having the right cost structure will be critical to determining which side of the line individual insurers will end up on”.

Financial crisis has impeded the insurance industry but it is not facing a systemic crisis due to regulations and sound portfolio management by the majority of players. While the robust spending that was previously anticipated will not materialise, neither will dramatic budget cuts.