Close Close

Practice Management > Building Your Business

Insurance Tech Vendors Are Suffering From A Crisis Of Confidence

Your article was successfully shared with the contacts you provided.

We live in an age of cheap and easy solutions, and thats not good news for the insurance technology market.

I recall seeing, several years ago, a cartoon that made the point quite well. It showed a commercial announcement blasting forth from a television set.

“How much would you pay to know all the secrets of the universe?” the announcer asks. “$100? $200?”

“But wait! Before you answer, well throw in this state-of-the-art spaghetti pot and clam steamer! Now how much would you pay?”

This is a perfect illustration of a modern phenomenon Id like to label “infomercial syndrome,” that is, the offering of an impossibly good product at a ridiculously attractive value point.

My 15-year-old son actually likes to watch infomercials, mostly because he is amazed at the hubris of the marketers and appalled at the gullibility of the buying public. He invited me to watch one such travesty recently.

Consider a certain infomercial “chef” and his fabulous set of kitchen knives. He slices and dices his way through a variety of meats, vegetables and other foodstuffs with unerring precision. Then, the pi?ce de r?sistance–the knives are used to cut holes in wallboard in order to make home repairs.

Why, such a device could save the average homeowner hundreds on power tools, while representing a bona fide threat to home improvement professionals everywhere!

Absurd as they sometimes are, however, infomercials continue to air for one very good reason–they work. And, unfortunately, the unrealistic expectations fostered by the “infomercial syndrome” may be a primary reason for a startling result found by Dallas-based researcher Robert E. Nolan Company.

Nolan surveyed 148 senior-level insurance executives, including CEOs, CIOs and COOs, from 122 insurance companies. Respondents were asked to agree or disagree with the following statement: “Technology vendors understand our business and work processes.”

Incredibly, 82% of IT-related respondents disagreed, while 61% of business-related personnel also disagreed.

Touching on the “infomercial syndrome,” Rod Travers, senior vice president of technology for Nolan, suggests there is “a continuing situation where technology is implemented or adopted with the expectation and sometimes the promise that it has best processes and best practices built in. But where the rubber meets the road, every company is different.”

Travers points out that a companys unique business model necessitates a unique way of taking care of customers. “The notion that best practices can be built in is true to a certain degree, but at a certain point, it doesnt apply,” he explains.

Sometimes, he adds, the fault may lie with the customer who has failed to understand or actualize his or her own business requirements. Companies that do this well tend to “have much better results” from software implementations, he notes. When they dont, however, “the vendor takes the rap.”

On the other hand, says Travers, when a carrier asks a vendor if a software product can solve a problem, the answer is often “yes,” even if the truthfulness of that answer is doubtful. This has the potential of creating unrealistic expectations.

Vendors who are successful are those who find out more about the customers problem before answering in the affirmative and who then make the solving of that problem part of the implementation project, he notes.

He adds, however, that vendors who take the more successful approach may risk losing the sale by not taking the business right away. “It could involve additional weeks or months of work,” he points out.

The bottom line, says Travers, is that “if you have a sale staring you in the face, its hard to say no.”

Eli Dabich Jr., president of Synergy 2000, a Chester, Md.-based technology and management services firm, offers additional perspective on the problem of unrealistic expectations.

“The prime reason [insurers dont have confidence in vendors knowledge of their business] is that most vendors have never worked for an insurance company, so they have no idea what insurance is all about,” he states.

According to Dabich, vendors may understand “the perfect way to do things, but in reality, insurance is still filled with exceptional processing. The exceptions always kill you.”

Dabich says that in most underwriters offices, the sticky notes on the monitor and piles of underwriting files on the desk are such exceptions. Automated systems, he notes, arent able to deal with such unique situations.

Clearly, theres enough blame to go around in the insurance industrys own version of the “infomercial syndrome.” Societal, media and internal business pressures push software buyers to expect all-encompassing solutions that will deliver return on investment–all at an amazingly low price, with little effort spent on implementation or training.

On the other side, business practices and competitive pressures may push vendors to promise solutions now and ask questions later.

Both positions are understandable, but neither is acceptable. In our sluggish economic climate, it does no one any good to push (or pull) a sale and implementation through, only to find that the product doesnt meet expectations, real or perceived.

Vendors need to take a true “solutions” (problem-solving) approach that demonstrates real-life value, rather than making unrealistic promises that will likely never be realized.

Buyers need to adjust their expectations to noninfomercial levels and to ask the hard questions about just how a proposed software application will solve a particular problem.

This may lengthen the sales cycle a bit, but it will also go a long way toward helping vendors regain the trust they seem to have lost among carriers. It will also go a long way toward helping buyers make wise choices, rather than impulsive buys based on unrealistic expectations.

Both parties need to adjust their sights and take a more objective look at technology sales and implementation.

For those who dont, I have only one question: What would you pay if they throw in that spaghetti pot and clam steamer?

Reproduced from National Underwriter Life & Health/Financial Services Edition, August 4, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.