Globalisation pushes SA insurers to standardise

South Africa`s short-term insurers seeking offshore business alliances and clients are increasingly under pressure to conform to international operational standards and best practices, and the sooner they accomplish this, the less costly it will be for them in the long run, says Rhys Collins, product manager, Insurance, for Computer Sciences Corporation`s Financial Services Group operations in South Africa.

Collins says South African insurance companies are hampered in their move to global standards because they use a diverse range of computer systems that were developed specifically for individual requirements and the local environment.

"Extending these systems to conform to worldwide best practice will be a costly exercise, but the long-term benefits are great," he stresses.

Adding to pressures to conform, which will be alleviated by adopting a standard messaging protocol, is the need to keep pace with the new, cutting-edge technologies that are continually being introduced in today`s rapidly changing operating environment. These technologies include Web-based services, which enable customers and suppliers - in fact any member of the value-chain - to access insurance companies` computer systems to process their own enquiries and transactions. The services also enable companies to streamline distribution of policies and other information.

Collins says the ability to manage information more efficiently and in increasingly innovative ways is crucial in the short-term insurance industry, and he emphasises that those who successfully service the various channels available to the value-chain will stand out among the competition.

"The ability to get real-time, accurate business information from business administration systems and avoid unnecessary duplication, will make a vital difference in a company`s ability to lead the market," Collins states.

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"This capability will give management better insight into customer behaviour and claims processes because it will provide them with an enhanced downstream ability to interpret their leakage exposure, be it through poor expense management or fraud."

Increasingly stringent regulatory requirements - particularly governing international transactions - will also contribute to a greater focus on data quality and availability, as well as increased spending on storage management software, document management systems, and backup and recovery systems.

"To enhance and strengthen international working relationships, to obtain and interact effectively with offshore clients, and form alliances with UK- or US-based insurers, a local IT platform is simply not enough," says Collins.

"Instead, it is critical that South African short-term insurance companies make it a priority to explore all avenues to ensure compliance with the international standards that are in place with their prospective offshore clients and business associates.

"It is necessary to bear the costs of such initiatives now in order to benefit from lower costs in the long run."