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5 ways the insurance industry will change in 2011

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1. IT is going to become the it department. With growing companies and growing customers, the IT department will continue to evolve, emerging from the back office into the core of an agency.

2. The industry will become more and more complex. There will be more products, more outsourcing and more complexity in general. The challenge, other than juggling the growing arms of the company, will be in how to present this complexity to the customer.

3. Outsourcing is going to be out. While outsourcing customer service overseas can be cheaper, insurance companies are realizing that the cheaper overhead doesn’t necessarily mean better bottom lines. Outsourcing some aspects of the business will remain, but outsourcing customer service will be reduced to help keep customers happy.

4. Companies will be working harder to keep free agents. With the initial investment it takes to train and attract employees, insurance companies are going to try to retain employees to ensure a return on investment.

5. A bottom-line focus will still dominate. In 2011, we’ll see continued emphasis on cost reductions. This is an evolution from 2010′s attitude of having to be efficient due to pressure from investors. Now, they’ll want to be efficient.

David Niles is the president of SSA & Company, a management and operations consulting firm that consults top insurance and reinsurance firms around the world.