Why Business Continuity Planning Matters to the Insurance Industry

Emerging technologies, ways to enhance productivity and strategies for success in today's competitive environment are just a few of the topics that are of critical interest to insurance industry professionals.

Technology Trends

"We were looking at the latest trends so that we are aware of new developments in the insurance industry," said Bob Goldberg, vice president of technology for Colorado Farm Bureau m Centennial, Colorado after attending the 2005 IASA Annual Educational Conference & Business Show.

"I use the IASA as a way to keep a pulse on the trends of the industry," said Perry Roschelle, assistant vice president of Hartford Financial Products.

For Roschelle and his colleagues at Hartford Financial Products, keeping up with trends and technologies including business continuity, network security and disaster recovery are extremely important, especially in light of changing times, regulatory demands in a competitive industry and potential threats to life, limb and liberty.

Located in New York City, Roschelle admits that he may perhaps find it more necessary than companies in lower profile locales to utilize available technologies. For example, at Hartford Financial Products, document imaging and data storage technologies are built into an overall business continuity and disaster recovery strategy. It can be important to stay on your toes, especially in New York City.

"We go the extra mile," said Roschelle. "We back up our critical business data real-time on several different servers in several different locations. In addition, we back up data to offsite, secure facilities each evening. These steps are why we did not lose any data during the NYC blackout last year."

Planning is the Key

Roschelle's feelings are echoed by a recent Forrester Trends Study published on February 10, 2005. This study, Industry IT Spending Profile: Insurance, by Andrew Barrels, set out to determine the top technology priorities for executives in the insurance industry.

The study's respondents indicated that "disaster recovery and Sarbanes-Oxley support are top insurance priorities for 2005." In fact, 36 percent of the 58 insurance company CIOs surveyed place "critical priority" on upgrading disaster recovery capabilities. Unfortunately, it is not always possible for full-time employees to do the prior planning necessary to bring critical systems and processes up-tospeed. Many businesses today, including insurance companies on both the property/casualty and life/health sides of the fence, are forced to focus more on reactive measures than on proactive processes. This means that until a blackout occurs or a high-level employee is stranded offsite without access to mission-critical information stored on the company's network - business continuity, disaster recovery and building a continuing, and connected business will often be afforded a back seat in the bus.

"Insurance companies need a partner that brings a strategic and tactical plan to the table in terms of a business continuity and e-commerce perspective," commented Raymond R. Uriarte, director of sales, business continuity and security services for AT&T.

"Security, connectivity, networking - are primary concerns. We're talking about issues that are important to senior level executives at insurance companies. They are focused on the big picture and things that affect the entire enterprise."

Making Insurance Easier

At Ameritas Life Insurance Corp. Daniel P. Meyer, CPA, FLMI, AIAF, is a corporate accountant in the Financial Reporting Department. He attends conferences for continuing education credits and hopes to "find new ways to make our jobs easier through technology."

One of the best ways insurance companies today can make jobs easier, improve productivity and proactively manage risk is by having the right hand talk to the left. In other words, business executives must understand the projects and priorities facing technology executives, and vice versa.

Joe B. Weinman, Strategy and Emerging Services VP, AT&T Business Services, asserts that, "A business executive who understands technology can make informed priority calls and investment decisions. And, a technology executive with business acumen will be able to screen emerging technologies to gain a competitive advantage, and ensure that the two or three key focus areas provide compelling customer and business value."

"Today's network-centric services are critical for business continuity, web services, collaboration, services over IP and much more. And, today's 'network' comprises not just switching, access and transport, but also hosted computing and storage resources and net-sourced applications on demand. Business drivers such as streamlining operations, enhancing distribution and customer service, increasing profitability and rethinking governance are key," continued Weinman.

"TowerGroup believes that many of the most pressing issues that insurance companies face today are firmly rooted in the ongoing disconnect between business and IT," writes Cynthia Saccocia, director of TowerGroup's Insurance Research Service, in a July 2005 report, Insurance Industry 2005 Executive Survey:Your Business,Your Focus,Your Role. "We find that IT executives have a chair at the table in business change management, project/priority setting and budgeting but do not actively participate in setting the overall strategic direction for the company or working on capacity planning. We believe this manifests a fundamental gap in planning strategies that complement a company's near- and long-term capabilities, setting the company up for failures."

Ultimately, the areas of expertise that focus on both business and technology are much more complicated today than they used to be, and it takes a continual effort on the part of insurance company executives to stay ahead of the curve. Isolated information and siloed business departments and practices are not acceptable in today's networked world - everything is interrelated.

Business and Technology Build a Foundation

"Business continuity solutions such as synchronous mirroring and active-active server fail over are at one end of the spectrum, traditional disaster recovery initiatives such as hot site subscription services and tape vaulting are at the other," said Weinman. "Different solutions along the spectrum may make sense depending on the business criticality of a process, and investment constraints relative to recovery time and recovery point objectives. Today's business continuity solutions are absolutely dependent on the network, since protection from smoking hole disasters can only be achieved through geographic dispersion, which requires a network. And as that network is becoming more capable - we continue to make enhancements in visibility, controllability and flexibility."

Uriarte agrees that business and technology elements must be intertwined to achieve balance in any organization. All the strategic business planning and financial management in the world will not make a difference in how an insurance company acts/reacts if there is not a strong IT infrastructure to build upon.

"The network is the foundation for business continuity - you can't buy it after the fact and expect to succeed," Uriarte commented.

Craig S. Lowenthal, managing director and CIO of Integra Ltd., a new insurance brokerage firm based in New York City, is in search of the best technologies on which to build a foundation at Integro Ltd.

"Infrastructure is critical," said Lowenthal. "Based on Integra's unique situation, infrastructure and agency management systems are of key interest, but emerging technologies, are also a key area for me to focus on. Wireless technologies, VoIP, WN, Java and .NET are all priorities that I am researching at the moment. And, with ubiquitous connectivity emerging, security is also of extremely high concern."

Recent losses and an evolving business landscape have caused the insurance industry in particular to place higher importance on business continuity and disaster recovery. However, Lowenthal feels that evaluating business continuity and disaster recovery as new or emerging technologies is incorrect.

"I wouldn't say business continuity and disaster recovery are emerging technologies," Lowenthal said. "Rather, in the past few years, they are more of emerging realizations."

Building a Business Continuity Plan

"Seeing companies needing to rebuild their data centers from scratch was a reality check," added Goldberg.

Goldberg further explained that data security breaches and cases of identity theft have definitely had an impact on the way he manages his company's risk. In regard to business continuity and disaster recovery, Goldberg has made it his business to be as informed as possible and the "end of the line" when it comes time to make a decision.

"As vice president of technology, I have taken complete ownership for this entire process," Goldberg explained. "Right or wrong, I have decided which system will be recovered first. And now, we have the capability, given enough time, to recover all production systems."

"We continue to invest resources (both financial and human) towards disaster recovery," Goldberg said. "And, during the last year...we also ran a complete recovery test."

The business driver prompting Goldberg to seek out new technologies is simple - operational efficiency.

"We need to continue to drive our expenses down and provide a higher level of service to our customers," concluded Goldberg.

Weinman's experience leads him to conclude that in today's global context laying the proper foundation for a solid business continuity plan is critical and should be addressed at an executive, and perhaps even at a board level. Weinman asserts that it would be a mistake for any insurance company to treat business continuity, disaster recovery and network functionality as simply a technology issue.

"In fact, the key to successful business continuity lies mostly with the 'soft' side, governance, business continuity strategy, policy deployment, auditing, business impact analyses, risk assessments and improvement program management and measurement," Weinman said. "That said, there is a new wave of technologies that is dramatically changing the business continuity landscape. ...These [new technologies] are transforming prior assumptions about cost, distance and data availability."

Drawing on his years of experience working with insurance companies, Uriarte offers one final bit of advice.

"Don't assume it is being taken care of for you," concluded Uriarte. "That approach will come back to bite you."