NEW ORLEANS, Nov. 16, 1998 — Taking a page from Amazon.com, tomorrow's insurers may become virtual companies that interact electronically with customers, while driving down costs and improving speed to market, a leading business futurist predicted on the opening day of Insurance Services Office, Inc.'s (ISO) AISG InsTech98 Conference.
Dr. Bill Bruck, futurist and author, made this and other predictions about new technologies that will reshape how insurers interact with customers, distribute new products and services, and compete in a "wired world" in his keynote speech before more than 700 property/casualty insurance executives attending the three-day conference.
Sponsored by ISO's American Insurance Services Group unit, AISG InsTech98 is the premier insurance-technology forum for the property/casualty insurance industry devoted to technology-application issues and solutions.
Dr. Bruck cited Amazon.com as a potential model of electronic commerce that the property/casualty insurance industry might follow. Amazon. com, an online bookstore that does not have any brick-and-mortar store, has transformed the retail book-selling business by interacting with customers exclusively over the Internet. Amazon.com isn't just a great use of technology — electronic commerce — but an entirely different way of selling books, Dr. Bruck observed.
The insurance industry, where vast amounts of data are available to both insurers and the insured, is facing a new paradigm. As a result, the insurance decision-making process is shifting dramatically, and technology is key to helping insurers master the new rules and profit from them, he explained.
Business-to-business electronic interaction is enabling companies to sharply reduce fixed costs and move to a variable-cost model, and to improve speed to market, Dr. Bruck said. At its extreme, the electronically-enabled variable-cost model is the virtual insurance company. Such stealth companies are silently growing market share and changing the economic model of the industry, he noted.
Dr. Bruck cited a European insurer that has captured a 17 percent market share over the past two years, virtually undetected. The company buys nearly all its capabilities from low-cost, quality producers and operates at a cost structure 50 percent lower than an integrated firm by outsourcing distribution, underwriting, administration and investment functions. In the next millennium, more companies are likely to do business this way, he noted.
ISO's AISG InsTech98 features six conference tracks on claims, underwriting, loss control, premium audit, data management and insurance technology, comprising 45 sessions and 95 speakers. Speakers have been drawn from leading insurance and technology companies including Travelers Property Casualty Co.; CNA Financial Corp.; CIGNA Corp.; The Hartford Financial Services Group, Inc.; The Chubb Group; IBM Corp.; Computer Sciences Corp., Automatic Data Processing, Inc.; and Control Data Systems.
In addition, ISO's AISG InsTech features a Technology Showcase demonstrating applications of insurance-industry software, and 62 exhibitors of technology products and services.