The press debate about globalisation and the reinsurance industry has concentrated mainly on the wider business issues, with relatively little discussion on what it means to information technology systems. While this may be understandable, IT enables and underpins the process of globalisation, and is moving up the agenda within many different organisations.
Getting the IT side of a company's operations right does not guarantee success, but it does provide a vital launch pad. Make a mistake, on the other hand, and your operations worldwide will be at a disadvantage. In short, the stakes are high.
Furthermore, some clear trends are starting to emerge. Just as companies are rethinking their business, underwriting and marketing strategies in the light of globalisation, some of the old assumptions about information technology are changing.
It is not unusual for a large reinsurance group to have several different underwriting support systems. This state of affairs is partly an inheritance from the “old order”. IT decisions were, until recently, taken mostly at a local level, reflecting the substantial measure of independence accorded to branches and subsidiaries. It was normal - and still is in some companies - for different offices to choose different systems. This diversity is also the inevitable consequence of consolidation. As you take over or merge with another company, you are likely to add to the number of operating systems under your ownership.
The dramatic level of consolidation during the 1990s has led to some groups acquiring a complicated and confusing array of different IT solutions. Making them compatible with each other can be a big headache, while failure to do so makes it very difficult to realise the intended benefits of coming together.
Increasingly, however, this hybrid arrangement is no longer acceptable to reinsurers which aspire to be global in both their reach and the way they operate. Many are now searching for a single IT platform to meet all their needs worldwide and to enable the theory of globalisation to become reality.
To achieve this, when it comes to e-commerce, companies must operate seamlessly as a single entity. An underwriter, claims manager or senior executive should feel totally at home with his or her company's software and computers - whether he or she is in the head office or in a branch many thousands of miles away.
One of main drivers behind globalisation is a desire to make the resources of a group accessible to all its customers and personnel regardless of location. One of the main potential drawbacks is lack of control over the amount of business being written, and difficulty in keeping track of cashflow. The way IT is applied - its consistency and functionality - can be part of both the problem and the solution.
If you have a large number of different systems, it should theoretically be possible to glue them together and make them work as one. In practice, such arrangements are dysfunctional. Reinsurers have come to realise that the optimal exchange information and resources and the ability to track underwriting and claims on a global basis depend on having one single system in place. This remains the case whether you opt for a web-based solution or something around traditional electronic data interchange (EDI).
While many are going down the outsourcing route, calling in specialist providers of software, one or two others appear to be leaning towards the in-house approach.
Whatever they choose, the qualities required are broadly similar: global reach; the ability to protect the initial investment by being flexible and able to adapt to new developments and functionality; user-friendliness; systems which do what they are supposed to do, and web enablement.
In terms of IT departments and their organisation, decision-making is not surprisingly becoming more centralised. For chairmen and their boards, e-commerce will be even more centre stage as a vital strategic area where decisions have to be taken at the top level.
In our experience some reinsurers are considerably better prepared for this revolution than others. More and more see IT decisions as being core to their business, to be considered at every stage of the decision-making process; to be an integral part of corporate culture.
Others, on the other hand, still regard it as being something of a separate function. They are in danger of losing out as the silent revolution continues to gain pace.