In the past few months,a number of new insurers have entered the market. Invariably the new insurence operations are joint ventures involving an international insurer from abroad. The insurance supply chain comprises many entities, of which the significant once are the foreign insurer, the Indian JV and the distribution channel. Banks and traditional distributors of financial products are the most preferred distribution channels.

The realtionships among the difeferent parties are following a certain pattern.

* The Indian JV relies heavily on the foreign party for the business plan, product creation, marketing and IT    strategy

* The distributor inturn looks up to the Indian JV for guidance in all critical business areas.

Thus there is a wave of dependency on the foreign insurer. The most positive outcome is that a number of parties are in a position to enter the insurance business in the shortest possible time.

However, the total reliance of the distributor on the Indian JV for all IT related matters could present a number of problems. Distributors are enterprises with a vast network of branches. Their operational structures, management approach, business processes, control mechanism and systems have evolved a period of time. The software installed at the new insurere's location in many instances is sourced from abroad based on the recommendations of the foreign partner.

This is fine except that in many parts of the world the insurance supply chain doesnot involve disparate corporate entities namely a solid insurer and a mighty distributor.

A good number of insurance software systems are built on some assumptions. Fundamentally they are built for insurers who directly distribute and service the market through branches and committed exclusive individual agents. This is some what similar to the LIC model.

The application software is designed to maintain control and provide information to decision makers that from a homogeneous group. Such systems may not cater to the specific information and control requirements of the distributor.

The distributors may need to expand their business to accommodate different types of insurance products as they go along. they may distribute products from different, sometimes competing, insurers. Relying heavily on the software and systems from a specific insurer could spell trouble in the future

The distributors have in place information systems that integrate all of their businesses and management structures.

Using a completely distinct insurance system offered by the insurer might dilute the coherensiveness of their existing systems and procedures. Also, in the indian context, restructuring of the distribution model itself could happen based on the assessment of the market by the distributor, from say an exclusive agent to a broad based broker. In such a scenario, the entire IT requirements would undergo a change.

A majority of insurance application systems are based on legacy technologies. But today, technology offers a number of benefits, by using web technology the distributor may connect all of his branches at the lowest cost. The multimedia and user friendly features of the web technology makes it very easy for operational people to use systems effectively.

Communications and information dissemination options available through web technology, through email, chat can make a big difference to day-to-day operations. By using old application systems, the distributor will have to forego all of these operational benefits on the one hand and on the other, pay for the increased communication costs.

Distributors of insurance products do need to look at IT strategy from a long term perspective. In their hurry to get the business going they should not compromise on their long term interests.