Young people don’t talk to each other any more; they text, facebook and twitter. The words themselves have become active verbs rather than the passive nouns they once were.

For brokers and insurers this means a whole new generation is going to want to communicate in a totally different way.

But as WR Berkley Chairman and CEO Bill Berkley noted in Sydney on Friday, society is now evolving so quickly that just staying in touch – let alone anticipating new technological and social developments – is becoming more and more difficult.

Insurers’ IT systems are now expected to keep changing to embrace new technologies and also deal with the problems that inevitably arise, such as security.

CGU CIO Ian Frew is one expert who feels the general insurance industry will be able to cope with new technologies and the growth of online transactions.

He says most insurers’ computer systems are fairly modern and very adaptable.

“The traditional insurance system came out in the 1980s and ’90s and has a core that is very capable of being extended,” he told insuranceNEWS.com.au.

“I don’t think we will have any problems with adapting these systems, as long as there is a good information technology team in place.”

In fact, one of the biggest problems the industry faces isn’t keeping systems responsive and competitive, or even able to adapt to changing customer preferences – it’s finding the right specialists to do the job.

Mr Frew says while CGU understands the risk involved with the increasing use of the internet in doing business, “the biggest issue for us when dealing with such risks and developing new systems is finding the right people”.

“It is very hard to get good IT people who have a background in general insurance. This is why we now spend a lot of time upskilling the people we already have.”

Mobius Underwriting Australasia CEO Tim Higgins believes IT will be playing a much bigger role in the insurance market in the future.

“Everybody is using IT and collecting data that will be used to push the product,” he told insuranceNEWS.com.au. “Nobody now disputes online platforms are the way to go, and we are seeing industries such as the Post Office looking at a digital service rather than traditional mail.”

Mr Higgins says the technology used by the consumer is now moving extremely quickly in many directions, and companies no longer have the luxury of “a couple of years” to catch up.

He cites the introducing of cloud networks by IBM and Microsoft as new ways of communicating which could dominate the industry in just a couple of years.

“Look how quickly email has become the accepted way of communication,” he said. “By adding Facebook to your communications you can suddenly access half a billion people immediately.”

Companies are now looking to include Facebook and Twitter in their marketing and communications options for the mass market, but Mr Higgins says for the top end of the insurance market, clients will still want face-to-face relationships with a broker.

The mass market, however, is where the online action is taking place. And this raises the question of who will pay for the greater ease of access to products. Because none of this is going to come cheaply.

Mr Frew says the focus nevertheless remains focused on the consumer, and insurers are realising technology spends are becoming more important to keep them in front of the consumer.

“In the past, the website was structured in a way that suited the company,” he said. “Now we look at the website through the eye of the customer.

“Insurance companies are looking at how they spend their IT dollar, and sometimes a budget is diverted from one area to another to meet a new challenge,” he said.

“Technology is now becoming more important in companies as they tackle critical distribution issues.”

The wealth management industry has already discovered how improved functionality can be very expensive.

An investment distribution platform provider will spend about $30 million a year on just maintaining its IT systems, while an upgrade to incorporate more features can easily leave a big hole in a $100 million budget.

Mr Higgins says the recent attack on Sony’s Playstation network has demonstrated that no company is safe from a cyber-attack.

“With one of the world’s largest technology corporations falling victim, we have seen the 21st century presents businesses with an ever-increasing array of intangible risks,” he said.

“Estimates show that total losses to cyber-crime globally were as high as $1 trillion in 2010.”

Mr Higgins says criminals have moved from robbing banks to hacking databases because it’s much more profitable and carries far less physical risk. “Cyber-theft is more lucrative than the drug trade.”

Mobius recently launched a product designed to cover damage and financial loss from accidental or malicious incidents to computer networks, software and data.

“Computer attacks, operational errors, network outages and data breaches may completely paralyse an organisation by bringing down information infrastructure and communication lines,” Mr Higgins said.

For the general insurance industry, it’s a brave new world out there. The problem is it’s changing all the time. And with technology, change doesn’t come cheap.