October 17th - 19th, 1999
Hyatt Regency Baltimore, MD

"Expert Urges Insurers to Tap Power of Their Internal Data "

Insurance companies are making strides in embracing more advanced technology, but they still need to harness internal data capabilities, said Michael Tyler, senior vice president and a partner in Boston-based Wellington Management Co., an investment management organization.

"The insurance industry is making substantial progress because it is a data-hungry business," Tyler told A.M. Best Co.'s 12th annual Insurance Information and Technology Conference in Baltimore Tuesday. "When you look at financial services broadly--and that includes banks and insurance companies--you've got the back office down well. But I would encourage you to work on the front-office end--internal technology."

Insurance companies are only beginning to address how they can reach customers and how they can sharpen their competitive edge, he said. "I think you should be thinking of how you create product," Tyler said.

Earlier, Tyler's colleague, Scott Elliott, vice president and director of client consulting at Wellington, described how the force of demographics, together with the wave of new technology, would drive the world's future--namely its most promising markets--over the next five years.

Compared with Japan and Europe, which have older populations, the United States will be hitting its "prime time" during the next few years. Baby boomers--who represent one-third of the U.S. population--will be from 40 to 64 years old. This group, Elliott said, is the biggest source of purchasing power on the globe right now.

"They have had a major impact on the US market as they have moved through life," he said. "They've been a tremendous boon to the real estate market and are the strong reason behind the mutual fund flows that we've been seeing."

"We think the US will be very well positioned for economic growth," Elliott said.

Close on the heels of this segment is an even bigger one--the so-called "Net" generation. These are American youths and recent immigrants under the age of 20 who are spending money on entertainment, technology and fashion. Within five years, however, they will be moving into the work force and buying their first homes, Elliott said.

"They are the first truly technologically savvy generation and the single biggest asset the US economy has over the next five years and beyond," he said.

To understand this group's economic impact requires understanding the coming new wave of technology, Elliott said. Computers are getting faster, the Internet is spreading and bandwidth is tripling of every 12 months. Just ahead are wearable computers, voice and gesture interface that will be particularly useful for drivers with their automobile computers, free personal computers and chips inserted in everything.

"We're finally going to have a smart Barbie," he quipped.

Traditional top-down business models will change with the growth of the Internet, too. "Organizations increasingly will be networked to other organizations," Elliott said. "The Internet allows the networking of businesses like no other technology" in the past.

Internet use also is changing marketing models, Elliott said.

By Barbara Bowers
Senior Associate Editor, Best's Review