Insurance IT investments

- Plans and Perspectives

Already half of the year 2009 has passed. Insurance companies
are signing new contracts, extending existing ones and indemnify-
ing losses. However, the economic conditions don't make market
participants optimistic. The atmosphere of escalating danger dis-
courages potential customers from buying insurance policies. On
the other hand, insurance mechanisms get more attention when
the future of economy is unknown. Both crisis and natural dis-
asters remind companies and people about the dangers and ne-
cessity of risk management; including, in particular, insurance
protection.

During the first half of 2008, the increase of acquisition costs was already
lower than the increase of the amount of premiums collected. Uncertainty
makes insurers hesitate and this is the reason for the reduction of IT in-
vestments and concentration on necessary expenditure. Insurance com-
panies which have managed to maintain a strong financial position and
have accumulated money early, now have an opportunity to distance
themselves from the competition. Beside difficult economic conditions, we
predict that IT investments in the insurance market in 2009 will remain
(mainly because of external conditions) at the same level as they were
in the previous year. Our clients are interested in a significant reduction
in employment and administrative costs. Comarch, as a supplier working
closely with leading insurance companies, has an offer for 2009 which en-
ables reducing costs and optimizing business processes.

The customer at the heart of interest

Under these conditions where attracting new customers may prove diffi-
cult, we predict increased interest in customer service expenditure. Defin-
ing and selecting appropriate segments of customers is more important.
Companies must ensure an appropriate offer as well as support in order to
provide added value and increase the loyalty of their customers. We are
witnessing increasing demand for all tools which ensure better service to
policyholders and the insurers. As a result, we have noticed a great
amount of interest in our multi-channel service platform for insur-
ance called CAFE.

As a long-term supplier of IT solutions for banking, we see that the ma-

jority of banks conduct customer service in the 'customer centric' model.
We expect a similar trend among insurers who are preparing to provide
customer service not only related to the execution of its policies, but in-
stead treating each separately. We see the involvement of insurance com-
panies in projects related to cleaning and organizing data as well as build-
ing a central customer database. More and more insurance companies run
CRM initiatives, including those based on specific analytical tools.
These conclusions are also based on the strategies formulated by the lead-
ing players in the insurance industry.

Automating + optimizing

Another trend related to both the economic situation and the availability of
appropriate information technology is automation. At present, our com-
pany continues to initiate further projects aimed at automating and optim-
izing key business processes related to customer service, indemnifying
losses, claims handling and billing.

There is a growing interest in direct insurance, which means not only the
implementation of an IT solution enabling a company to sell insurance
over the Internet and through a Contact Center, but above all, direct ac-
cess to information on client insurance contracts with the ability to per-
form selected operations (the so-called insurance e-account).

Solvency II – risk control

Although economic conditions may once again postpone the adoption of

the Solvency II directive, insurance companies have already begun prepar-
atory actions. The scope of work includes the design and building of data
warehouse systems, increasing the importance of risk management, the
implementation of fraud detection mechanisms as well as enhanced re-
sponsibility and control over resources.

Administration – infrastructure maintenance

An important direction is the tendency to organize processes in insurers’

own IT departments, for example through the implementation of ITIL prac-
tices. Insurance companies will also increasingly reach for outsourcing in
each area where it will prove more effective than utilizing their own re-
sources. Hence, interest in our Data Center services continues to increase.
Virtualization will provide insurers with the possibility to use the existing
hardware resources of the company’s IT environment in a more effective
way.

One of the most interesting trends is the growing need for the deployment
of solutions to deal with health insurance. Despite the legal changes, these
kinds of IT systems are gradually assuming a greater importance and are
arousing interest. We believe that attention should be paid to such innov-
ative utilities like the electronic medical databases (eg. iMed24, Google
Health), which enables taking care of a patient's health in a modern way
via the Internet. Another interesting trend is the launch of EBPP services.
This IT solution enables a company to deliver e-invoices to the banking
system of client and allows him to make a payment using "one-click" (eg.
iFin24, BILIX).