Insurance technology firms shift their go-to-market approach


Several large insurance technology companies have recently made significant investments in acquisitions, partnerships, or restructurings in a bid to strengthen their go-to-market approach. Ovum is not, however, convinced that insurance companies will spend enough money with each of these technology firms for them to realize a reasonable return on their investments within the next five years.

In the first half of 2010, several large technology companies have invested billions of dollars in acquisitions, partnerships, and reorganizations, in an obvious move to change their go-to-market approach to the global insurance industry. These investments are a clear admission that their current approaches or skills are not helping them to achieve their objective to strengthen their presence in supporting the insurance industry, either now or in the longer term.

Most recently, SAP announced on May 12 that it would acquire Sybase for $5.8 billion, while one of the speakers at EMC’s May 2010 EMC World Conference in Boston discussed the firm’s deeper partnership with SAP. In April, SunGard announced the formation of a 4,500-person Global Services Organization combining its consulting and technology service teams, and in February Xerox announced it had acquired Affiliated Computer Services for $6.4 billion. In addition, last September Dell announced that it had acquired Perot Systems for $3.9 billion.

Why are these technology companies making such large investments? The answer lies in the even larger amounts that insurers spend on technology. Datamonitor’s most recent report on the topic, Insurance Technology Industry Spending Through 2014 (December 2009, IMTC0364), estimated that global life insurance IT spend in 2010 will be approximately $32 billion, and that global non-life IT spend will be approximately $42 billion. Technology companies supporting both life and non-life are looking at a potential jackpot of over $70 billion.

Thus, investing four, six or even 10 billion dollars on a one-time basis pales in comparison to the size of the opportunity. However, Ovum does not believe that the technology companies driving this current round of investments will reshape themselves and generate a reasonable return on their investments from their sparkling new solutions and services anytime soon. Ovum also finds it difficult to believe that the acquisitions, partnerships, or reorganizations will actually succeed in producing a reasonable timeframe for the resulting solutions and services to be brought to market with the level of support that insurers will demand.

Insurance company executives can expect to receive a barrage of emails and phone calls about the promises and virtues of the new value propositions resulting from all of this financial and reorganizational activity. While the firm knocking on the door might be different in shape and reach, insurers will hear the same promises as before: streamlining business operations, reducing costs through outsourcing, complying with the never-ending stream of regulations, and, of course, becoming more agile.

However, the siren song of yesterday will not be enough to drive insurers to swap their current technology providers for new ones, regardless of the billions of dollars invested, the time spent trying to make a partnership a fluid and coherent force, or the time spent creating a global services organization. Insurers will insist on pilot programs, experiments, or modular initiatives to determine whether the promises are actually different. More importantly, Ovum believes that insurers will realize they must determine whether the solutions and services provide true value that will enable them to meet their own competitive objectives.

Global financial risk: BBC Paul Mason’s view on VIX index


I am a regular follower of Paul Mason’s (I have previously recommended his excellent book – Meltdown: The End of the Age of Greed) but, on this occasion I beat him to the punch! I drew attention to the relevance of VIX in my blog on 21st May!!!

But it may be hugely significant so I make no excuse in passing on the contents of his blog 

VIX2.jpg

The VIX Index is the nearest thing we have to a global Geiger-counter of financial risk. This is how it’s trending since the Eurozone crisis kicked off. I’ll be blogging more on this and covering the slide on the financial markets later. For now I leave you with the following thought: the VIX is nowhere near the highs it reached after the TARP failed and global contagion took off. But it is higher than it was on the day Lehman collapsed.

Will insurers adopt tools for NOW to minimise risk tomorrow?


Why are insurers ignoring the facts?

Why are they still trying to predict the future using incomplete data, assumptions and flawed models?

Read more of this post

How long before the wheels come off?


The Right Side newsletter says:

Trying to drive while a passenger’s fat, clumsy hands are grabbing at the wheel is practically impossible. Nobody’s certain of where the car’s going…

Right now we’ve got politicians all over the globe grabbing at the wheel, causing uncertainty like we’ve never seen before. And it’s uncertainty that markets hate most.

Look at how the markets went hysterical when the Germans announced a ban on short-selling certain financial instruments. The announcement came seemingly out of the blue, making markets even more suspicious… what do the Germans know that we don’t?

Then in Washington, the US Senate voted 94:0 to stop the IMF “using its cash to help countries that are inextricably trapped in a debt spiral”. Now, that looks pretty serious to me and it’s riddled with uncertainty. Which countries are ‘in a debt spiral’? I thought that Greece was… so does this mean Greece isn’t getting a loan after all?

And this morning we read that the US has just voted through new legislation to tackle the banks, Obama says that Americans will never again pay "for Wall Street’s mistakes"… markets hate this sort of thing…

How do we know… because the Vix index tells us…

What the Vix index is telling us
The Vix moves up when investors are fearful. And just look at how the index is spiking now (blue arrow).

2 Year Volatility Index (VIX)

Is Your Right Brain Under-Developed?


 

In his book, The Way We’re Working Isn’t Working, best selling author, Tony Schwartz reminds us that the right hemisphere of our brains tend to be under-developed. He quotes neuroanatomist, Jill Bolte Taylor’s mind-bending experience of left brain dominance until after suffering a near death stroke.

Schwartz highlights numbers that say it all:

80% don’t feel fully engaged at work every day.
60% get away from their desk for lunch less than twice per week.
40% leave at least one week of vacation unused.
70% check their email on vacation or days off.

To spark your creative process:

Schwartz suggests things anyone can do to spark the right brain and work better right now.

1. Break every 90 minutes to renew and recharge.

2. Eat small portions of energy rich foods every three hours.

3. Avoid frustration or anxiety when stressors hit, by breathing deep.

4. Tackle important tasks first thing in your day – when brainpower is high.

What do you do to ensure your right brain is taking care of you – and your work – as it’s designed to do daily?