Enterprise content management (ECM) has emerged as a major priority for European insurance firms, with increasing numbers being nudged into action by industry regulations and competitive pressure, according to new research.

A report compiled by analyst firm Datamonitor on behalf of ECM vendor Hyland Software suggests that European insurance companies may be about to follow their US counterparts in deploying ECM systems.

Datamonitor found that 65 per cent of medium-sized and large insurers considered the workflow automation and data management features that ECM solutions provide as their top IT priority for 2007. With manual claims processing accounting for 70 to 80 per cent of typical running costs, it is no surprise that many are looking to ECM to streamline their operations.

“ECM is ideally situated to overcome the challenges of compliance, competition from a glut of non-traditional players and creating market differentiation,” said Hyland European solution strategist, Darren Boynton.

Mike Davis, senior analyst at research company Ovum, pointed out that the EU’s Markets in Financial Instruments Directive (MFID), due to be implemented from 1 November, does not require ECM deployment. But to avoid the sort of problems caused by mis-selling of endowment policies in the early 1990s, it does demand that all financial institutions are able to assess the latest information available from a variety of sources when dealing with customers.

“It is about moving from straight transaction management into records management, holding information and capturing it, and that is ECM,” Davis said. “Ideally, loss adjusters, underwriters or claims assessors want the most comprehensive view possible of previous claims and premiums history, and comparative information about what competitors are charging.”

Hyland is one of only a few ECM vendors specifically targeting the insurance industry. It competes with products such as IBM’s FileNet and OpenText’s Livelink ECM solutions, as well as broader ECM products from EMC, Microsoft, Vignette and Oracle through its Stellent acquisition.

But while vendors have had success in selling ECM products into other industries such as healthcare, government, manufacturing and transport, the insurance sector has proved a tougher nut to crack.

“The culture has often prevented insurance companies from realising the benefits of ECM. Insurers have been accustomed to manual, paper-based processes for decades,” said Boynton.

Davis agreed that insurerers have been more interested in high-volume claims processing than in business intelligence and risk management, and that many have never even heard of ECM, let alone understand its benefits.

"It could be a lack of vision, but it has almost never been done before. The vendors know the advantages ECM can offer, but they seem to have been unable to communicate them to the insurance companies,” said Davis.

Boynton suggested that insurance firms nervous about introducing ECM technology could pilot it in one or two departments and expand the system over time.