New York, NY, USA
November 4, 2004
The
Virtuous Cycle of Compliance and IT?
Report Published by Celent
By shifting to a strategic, issue-based approach,
Celent believes that insurers could reduce their compliance-related IT
spending by as much as 25 percent, or more than US$350 million
industry-wide.
The importance of regulatory compliance is at an
all-time high for insurers and their IT departments. Between
Sarbanes-Oxley, GLBA, HIPAA, USA PATRIOT Act, and various state
regulations, Celent estimates that insurers are devoting an average of 20
percent of their new project IT budgets (or US$1.4 billion industry-wide)
to compliance-mandated projects.
In a new report, The Virtuous Cycle of
Compliance and IT?, Celent examines the key
compliance, IT, and business issues facing insurers and how they overlap.
The report briefly highlights some compliance-driven IT projects that
delivered broader business value. It concludes with key points for both
insurers and solution providers.
Insurers have had a tendency to approach compliance
on a statute-by-statute basis, scrambling to meet the specific
requirements of each new mandate without taking a holistic and strategic
view of their common issues. Celent believes that by shifting compliance
IT efforts from a reactionary, statute-based framework to a strategic,
issue-based one, insurers can reduce the "compliance-mandated"
component of their new project spending by at least a quarter.
"Most compliance mandates involve a few key
issues, which in turn map to four key IT areas: data and network security,
data quality, operational and financial transparency, and record retention
and accessibility," says Matthew
Josefowicz,
manager of Celent’s insurance group and author of the report.
"These are the same IT issues required for key business initiatives
like improving cross-selling, pricing and underwriting ability, business
intelligence and strategic planning, and multi-channel distribution."
Celent’s report recommends that insurers recognize
the common ground between compliance IT issues and business IT issues, and
understand that compliance and IT departments can be natural partners, not
antagonists. By banding together, they can make a stronger case for badly
needed infrastructure improvements that business is often hesitant to
sponsor on its own, improving each department’s efficiency while
creating business value across the enterprise.
The 20-page report contains five figures and four
tables. A table of contents is available here.
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