Insurers Take on Technology

Setting the Tone to Expand Business Opportunities

December 2014

A Q&A with Peter Thurmond

Against the backdrop of heavy industry regulations and rising demand for operational systems that can gather and transfer data seamlessly and cost-efficiently, insurance companies stand at a crossroad. Though outdated technology poses a threat to long-term business growth, many insurance executives don’t know where to begin in upgrading their legacy systems.

Peter Thurmond, head of State Street’s Insurance Sector Solutions for the Americas, explains the challenges facing the insurance industry today, the need for new technology and steps insurers can take to make it happen.

Q: Technology is a big and complex topic. Where’s the focus for insurance companies?

A: In a lot of cases, insurance companies are learning how to better manage data. There’s so much information available today and it offers vast opportunities, but they need a holistic view of it to target new customers and service existing ones.

Q:  What’s preventing insurance companies from fully embracing technology?

A: Partly, it requires a cultural shift. For years, insurers have set up their infrastructure to do business a certain way, so systemic change is daunting to take on. Many have grown with acquisition, creating silos, and they’ve also had to keep up with regulatory requirements and investment changes. All of these things can create a spider web of technology.

Insurers must rethink a broad range of areas, including employees and expenses. If they can retire layers of inefficiency, they can gain the insight they need from their data and use it effectively to advance their business strategies.

Q: So what should insurance companies think about if they want to upgrade technology?

A: They want their technology strategy to align with the firm’s long-term strategy and business priorities. Insurers should be able to pull together clean data in a comprehensive way, so if they need to make operational or investment changes, they can make them quickly and nimbly.

If they’re starting to invest in alternative asset classes, effective risk and performance analytics systems are essential. And they’ll want professionals on staff with the skill sets to advance growth. Insurers want to know where their information is coming from and populate it across systems to make better, faster decisions in an ever-changing marketplace.

Q: That’s a lot to take on. Are some insurers looking to outsource IT resources to meet this need?

A: Definitely. There are a lot of benefits insurers can get from working with an external provider. First and foremost, it allows them to focus on the business of insurance and investment management. They can tap into scale, expertise and technology platforms that already exist. When changes occur in the marketplace, an external provider updates their systems to benefit all of their clients. They can make improvements more cost-efficiently than companies that try to upgrade their internal operating systems on their own. 

Q: At the end of the day, what are insurers trying to achieve?

A: Insurers want agile and flexible systems that allow them to grow with their existing client base and bring on new clients. Markets are evolving so quickly that leaders will focus on what they do well and outsource areas where possible to gain leverage.

A defined strategy is important, but the technology also needs to be flexible and scalable — so insurers can react and move in any direction they need to.

Contact Peter Thurmond:
+1 617 664 6676
peter.thurmond@statestreet.com

The views expressed in this material are the views of State Street Corporation as of December 9, 2014, and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

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Pete Thurmond Jr is a senior vice president and head of State Street’s Insurance Sector Solutions in the Americas