Significant cost reductions and their long-term stabilization are just the starts. Beyond that, streamlining operations will help Life insurers better serve their clients, thereby establishing a solid foundation for growth.
As mentioned above, life insurers face several significant pressures from their customers and regulators and must respond in parallel to new market demands (new and existing). Flexibility and speed are essential to obtain a high-level performance. And yet, most companies are crippled by existing systems: difficult and expensive to maintain, they do not support future strategies. Most insurers recognize that they need to optimize their operating platforms to contribute to future success. They seek the following benefits:
• Reduce operational costs. Older platforms are expensive to maintain and upgrade. Modernization efforts are often unsuccessful and add to the complexity. In contrast, a modern platform introduces efficiency that typically reduces application and IT infrastructure costs by 20-30%, development costs by 20%, and service costs per policy by 30%.
• Improve speed to market. Today, customers want their needs met quickly, and competitors are preparing to meet them. Long product development times are a luxury no one can afford anymore. Modernizing the platform can increase speed to market by 25% and cut the time to implement new products in half in six months.
• Develop new services using new channels. Speed does not meet the expectations of all customers. They also require the ability to interact with life insurers on the exchange channels of their choice. Products in silos, linked to “frozen” channels, will no longer be tolerated. Customers want seamless and consistent experiences.
• Become technologically agile and profitable. Modern systems use a service-oriented architecture, reusable services, cloud computing, and “all-service” computing models to reduce complexity and increase agility. All of this enables life insurers to reduce costs while serving customers better.
• Improve the subscription and pricing strategy. With modern systems, better use of big data analytics is allowed, as well as weaker business rules. They make it possible to support the business model of life insurers and to price risk more effectively.
• Reduce business and IT risks. The “high performance” insurer of the future will be a Digital insurer. Abandonment of unmaintained technologies, reduction of dependence on specialized resources, reduction of defects, and development of the capacity to implement an agile operation… All this reduces the technological risk and consequently the risk for the business.
• Improve return on investments. From what we observe, modernizing IT platforms can generate significantly higher returns than current best practices.