Global Reinsurance asked representatives from IBM about the organisation's thoughts and strategy surrounding the Latin American re/insurance community.
Q: Could you outline the impact e-business is having on business practice in the Latin American insurance community?
A: E-commerce is being increasingly adopted by many carriers, brokers and reinsurers as they realise benefits such as reducing operating costs, extending the traditional markets to new segments and products, increasing channel loyalty, improving service for customers and brokers, and opening a window to sell directly to end-users, where the country legislation allows it.
However, e-business implies a total business transformation, not only adopting e-commerce, and here we see more work to be done, like transforming the processes, applications and culture to be customer centric, being supported by a clear strategy in customer loyalty.
Q: What opportunities does the use of information technology (IT) lend to Latin American re/insurance organisations?
A: Organisations can better position themselves for mergers and acquisitions by optimising operational costs and improving customer and broker service. On the other hand, many companies are using IT to achieve a competitive advantage by converting the traditional large amounts of data into information and then into knowledge; knowledge that can improve the underwriting process, facilitate the policy subscription and then refine the claims process to reduce fraud and abuse.
One of the largest Brazilian insurance companies recently launched a project, first in the world with IBM, to control fraud and abuse in auto claims. Similar initiatives using IT can be explored and initiated to achieve competitive advantage.
Q: What has the take-up and use of IT solutions been like so far across the continent?
A: Brazil and Mexico have the largest markets as well as the carriers with the size and capability to introduce and experiment with new technologies. On the other hand, the Brazilian banks have influenced their own insurance companies by accelerating the use of the Internet, in such a way that the IT budgets for e-business in insurance are growing at a faster rate than the IT budgets for the banks. In addition, global carriers with a presence in Latin America, such as Allianz, AGF, ING, AIG, ABN, Prudential and others, are bringing know-how and solutions in key areas like e-commerce, customer relationship management (CRM), business intelligence and claims management.
Q: How do you foresee the use of technology changing the profile of the Latin American re/insurance industry? Do you anticipate increased international competition through e-commerce initiatives?
A: The current technology trends offer deep computing, a wired planet, new user interfaces, e-sourcing (new ways of acquiring software and services), and more power in every device (servers, PCs, PDAs and cellular phones as well as imbedded devices).
This technology plus the industry forces (globalisation, the shift in customer needs and expectations, and changes in regulatory laws) are reinventing the economy. And, of course, Latin America is not an exception, especially considering the wide room to grow the market size, when the total premiums are less than 3% of GDP (as compared to 8-12% in other geographies), which makes these markets very attractive for the global insurers.
Q: How have the various re/insurance markets across Latin America responded to calls for international industry standards in technology?
A: Forums like this one at FIDES stimulate the promotion and adoption of these standards. Again, large countries are in a better position to take the first step. IBM believes that industry standards for information exchange are especially important. We support ACORD and actively participate in subgroups for setting industry standards. ACORD's recent acquisition of WISe (including RINET and LIMNET) has positioned it as the pre-eminent standards-setting organisation across many lines of business in the global insurance environment.
Q: How do technology solutions deal with non-standard issues such as different legal systems and wordings across Latin America?
A: Traditional technology providers like IBM with several decades of presence in these markets already know how to deal with these non-standard issues. New entrants are making alliances with traditional providers or with local companies to solve these issues. For insurance companies selling products and services across borders in Latin America, the European experience can be a model to follow after, dealing with different languages, wordings, currencies, laws and nationalities.
Q: How do you see the use of technology changing the re/insurance sector in the global context?
A: As we mentioned before, the technology trends and industry forces are creating a new economy. In this context, the re/insurers need to evolve to what we call the ‘digital enterprise', which arises from the application of technology for efficiency, speed and new value propositions. We see that the e-business of the future will be dynamic and adaptable, and will depend on powerful business analytics and knowledge management for survival; mobile devices will be the dominant means of information access; IT value will advance by building higher level software components, increasingly delivered as services; a utility-like model for IT will emerge based on an intelligent infrastructure; and voice recognition and biometric advances will improve security and ease of use.
Q: Particularly in the light of the events of 11 September, how do you foresee the use of technology in the changing risk world? As business people are increasingly warned away from travelling, for example, what types of e-business solutions will step in?
A: Technology will play a major role in improving security for individuals, businesses and governments. Technologies such as biometrics, global positioning systems (GPS) and wireless communications will improve identification and tracking of people and property. The implementation of these technologies will be governed more by privacy and public policy than the technology capabilities.
Q: Where does IBM see its position within the Latin American re/insurance marketplace, and in the global re/insurance market context?
A: IBM is the industry leader in the global market as well as in Latin America. This position allows us, and commits us, to continue investing in research and development to provide the best industry solutions as well as the technology leadership, working to be the number one in customer satisfaction, serving the communities where we operate, and returning the appropriate value to our stockholders.