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How can insurance CIOs deliver on their objectives?

During my numerous years at board level, I have noticed that the objectives of insurance CIOs have tended to stay the same year-on-year. Things like keep the lights on, deliver the projects, manage the risks, save money and keep us secure have featured almost constantly since businesses really started leveraging IT in the 1990s.

Delivering CIO objectives

However, all that is now changing. And it’s changing fast. As regulation and digitalisation increase, the breadth of technologies continues to grow. As older technologies continue to live on way beyond our estimation, and as IT breaks out of the middle office to become the primary engagement channel for clients, unprecedented demands are being placed upon CIOs for new capabilities, new skills and new insights.

Keeping the service running

A prime example of how CIOs' responsibilities are changing is the objective they are always given around keeping the lights on. In the last couple of years, this need to ensure the service is running has been magnified due to a change in emphasis.

As more business is traded digitally than through other channels, the focus of CIOs has moved from the internal systems required to run the business operations to external-facing technology, visible to every member of the public looking to get a quote, make an adjustment or claim after an incident. I fully expect CIOs to become ever more focused on their big front window as the technology within their remit becomes ever more outward-facing.

This has also led to harder availability targets, meaning insurance CIOs are impacted by the law of diminishing returns. When I first started as a CIO, availability targets were 95%; now they are 99.9% or 99.99%. The closer companies get to smaller marginal gains, the double the effort that is required to get half as far. There is a need to break through the ever decreasing returns.

Responding dynamically to changing markets

Another area that seen significant changes in recent years is the speed at which big programmes, such as opening up new product lines, need to be delivered. While a time to market of six to nine months used to be the norm, it is now inconceivable that this would take longer than a few weeks or days.

To help insurance CIOs meet the challenges of these changing timescales, SSP has developed the most sophisticated pricing engine in the market. As a sophisticated whole of market product rating and quotation solution, SSP Intelligent Quotes Hub (IQH) enables insurers to dynamically get rating changes out, in real time, in response to fluctuating market conditions and bring products to market quickly.

The impact of regulation and the boom in data

Regulation is proving to be a big game changer for insurance CIOs, and never more so than with the transformation of privacy regulations that is coming into effect in May through the General Data Protection Regulation (GDPR). As processing personal and private data is the lifeblood of insurance companies, meeting the deadline will be only the first hurdle.

As the compensation culture gathers pace, the crackdown on whiplash claims has pushed ambulance chasers from PI to PPI. When the deadline for claiming for breaches of fair trading on PPI is reached in August 2019, I believe they will latch onto GDPR breaches and a whole industry around breach claims will emerge – setting a trend for any new regulation introduced going forward.

For CIOs, the onus to prove there has not been a breach will be huge, and having just one platform will be much safer and easier in this respect. Having multiple legacy systems will therefore prove to be even more of a burden than is already the case.

A further objective that is gaining ever greater precedence for insurance CIOs in this age of data is business resilience and making sure their disaster recovery plans are proven and exercised. While this has always fallen under the CIO's remit, as insurance firms increasingly become data businesses, cyber threats will become the number one risk. Protecting against these will be a major responsibility.

For the first time in history, the CIO will have the ability to bring the whole business down, and that is a big burden to bear. Not staffing the call centre would prove problematic, but not fatal. Yet if a cyber-attack is successful, the whole insurance business could go under or, as with threats like WannaCry, be quite literally held to ransom.

Obviously one person can't hold all that risk themselves, so it is important that insurance CIOs transfer some of the burden to a trusted software house partner, such as SSP.

Reducing running costs

Cost has always been a factor in a CIO's objectives, yet this is another area that has seen fundamental changes. As insurance businesses become more automated, CIOs are being tasked with reducing the IT cost per policy or per employee. This need to reduce the percentage of revenue spent on IT is another good reason for moving away from legacy systems in favour of simplifying the IT estate.

To be able to achieve an ongoing 5% or 10% reduction in the cost of running their business, CIOs need to ensure they are prioritising the best projects. They need to help the business make the right decisions, and so can't allow colleagues to selectively pick particular projects. After all, the CIO is the only one with the return on investment objective to meet and probably the only member of the Board, other than the CEO, who truly sees the whole of the business as one.

Innovation and new technology

Finally most CIOs now have an objective outlining their digital or innovation responsibilities. Often this will require them to present their thoughts on new technology to the leadership team.

Two options in particular are open to insurance businesses looking to increase sales: introducing new lines of business or re-platforming their current technology onto a new platform for the current lines of business.

The second of these is much harder for CIOs to prove the business case for. If the system looks shabby, but is making money, then the CIO is taking a risk by pushing for a change of technology. As a result, many CIOs have been reluctant to take on these projects.

Yet there are a number of reasons why the removal of legacy systems should be a top priority. The number one justification leading to a successful business case is regulation. As we have already seen, regulation is proving to be a big game changer for CIOs. It is simply too much of a burden for legacy technology, whereas a new platform enables insurance business to get going quickly.

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