Now that Anthem and Cigna have announced their merger deal, industry experts believe both insurers' IT departments will be working overtime as their budgets and size increase, Insurance Networking News reports.
Indeed, one of the reasons the insurance industry is abuzz with mergers and acquisition activity is so companies can quickly obtain robust technology, according to a report on M&A insurance activity from Swiss Re and Sigma.
"Although still nascent, a number of recent M&A transactions in insurance highlight the growing influence of technology as a motivating factor," the report said.
But combining two of the big five insurers' operations will take months of research and planning before they can begin consolidating their IT capabilities.
"It's a huge effort to evaluate every aspect of IT to ensure the right combination of best-of-breed technology, cost management and, most important, that your best people are still a part of your future," Tom Scales, research director, life, annuity and health at insurance research Celent, told INN.
To succesfully combine operations, the companies must first evaluate the scope of both IT worlds, then develop a game plan for the first 100 days, and finally, move the new company forward and keep customers and employees happy, said Deb Smallwood, founder of insurance technology consultancy Strategy Meets Action.
She added that although the companies will spend more money initially to consolidate their IT efforts, "over time, the sum will be less than two independent companies."
One issue in particular that Anthem and Cigna must address with a merger is ensuring their members' satisfaction, Scales said. He suggested the newly merged insurer consider how it can make the transition "seamless, simple and not intrusive" for its members and how it can improve its members' overall experiences.