Archives for June 2010

Measuring the value of your web sites

The Guardian newspaper in the UK reported that the UK Government is looking at closing up to 75% of it’s websites. The challenges facing the UK Government in terms of cutting costs and ensuring that they are getting value from assets are no different to the issues facing insurers in these uncertain economic times. Whilst it may not be typical to look at the approaches taken in the public sector to cost cutting there are some interesting features of the approach taken by the Government. Of particular interest was a KPI quote in the report regarding cost per visit. The article cites one website that costs £11.78 a visit versus on that costs £2.75 a visit. Such an analysis and metric would be most useful to insurers – particularly those that are operating multiple brands on different sets of technology. Of course getting to the true cost of running a web site can be difficult, but an educated estimate along with existing web site analytics data would allow a similar analysis – one that could produce the same savings in a direct insurer or any insurer with multiple Internet applications. The other point made in the report is that some government units were competing with each other in terms of marketing and search engine optimisation spend. Having two units in the same organisation bidding for the same search term in Google advertising for instance is simply not cost effective. As above, in any insurer operating multiple web sites or multiple brands this kind of activity could be prevalent but not immediately obvious, perhaps this is something insurers could review and see where savings could be made. I doubt insurers should make the kind of culling of 75% of their websites that the UK Government is discussing but the principle is sound and relevant to Insurance. Insurers should ask themselves how many websites they are running, are they all equal in cost and could any of the services be merged onto cheaper platforms. In these cost constrained times it’s key that insurers not only examine core systems for possible cost savings but also the eco-system of ancillary applications and servers running the enterprise.

Regulation raise IT hackles

The much feared UK emergency budget speech was made yesterday, and amongst a raft of changes impacting every corner of the British society was an increase in the tax on insurance purchases. The rate is to increase to 6%. A new peculiarity to this system is that tax on insurance sales will rise to 17.5% where the insurance is sold by seller of another product e.g. mechanical breakdown insurance (eg on domestic electrical appliances and secondhand cars), travel insurance, and insurance sold with TV and car hire. The challenge for the IT department is to respond in a timely fashion. Older legacy systems will have charges codified in several places and this reflecting this increase is not a simple matter. And once the change is made in the several systems and many places, there is the round of testing that is required. This whole cycle of change can be up to 9 months depending on current workload and dedicated IT test slots. In a conversation with a CIO on a different set of regulations, Solvency II, she raised the prospect of potentially having to replace incumbent legacy systems if they could not capture the additional data elements required in a reasonable cost. Adding new data elements to a core system, and having this reflecting in the appropriate screens is no trivial matter. And once again, requires serious investment of IT staff for testing for production. These real life use cases highlight the need to IT systems to be able to keep up with the change of the business, without a crippling cost. In choosing new systems, IT folk must focus as much on functionality as on the cost of ownership. As this week has shown once more, fleet of foot should be a key mantra in new system investment.

7.15.10: Celent Tokyo Insurance Roundtable 2010

Celent senior analysts, Insurance Group and Asian Financial Services Group This event is free for insurers and Celent clients. Non-clients can attend for a fee of JPY25,000. Celent will contact non-clients after they register for credit card information. Please click here for more information.