Hamilton, Bermuda - Big European insurance companies are embracing industrial operating models to cut costs and improve customer service, according to an Accenture survey of senior executives at 30 carriers based in Europe.The survey revealed that 92% of respondents are assigning high priority to "industrialization"--the use of standardized operating and production platforms similar to those used by manufacturers. The rest of the respondents--the other 8%--say they expect industrialization to become a priority in the next three years.
Asked to name the benefits of industrialization, respondents most frequently cited cost reduction (50%), improved service (25%) and better risk management (20%).
"Our research shows that a dominant and growing number of leading European insurers not only recognize the importance of industrialization, but are openly embracing it," says Serge Callet, managing director of Hamilton, Bermuda-based Accenture's Insurance practice.
Two-thirds (66%) of respondents say they expect their front office to become "largely automated" within three years, while just 23% describe their front offices that way now.
Back-office functions, such as administration and finance, were described by more than 80% of respondents as "more automated than manual" today. Back-office processes account for six of the 10 most automated functions, respondents say.
The survey indicates the number of insurers that co-source or outsource core insurance processes, such as policy management and premiums collection, could triple within the next three years, climbing from 11% today to 33% in 2009.
Based on Accenture's "Industrialization Index"--which measures degrees of automation--the most-industrialized insurers in the survey were roughly three times more likely than the average insurer to co-source or outsource claims settlement processes (22% vs. 8%, respectively) and premiums collection processes (25% vs. 8%). respectively).
"With significant levels of back-office automation having been achieved in recent years, we see a new wave of industrialization coming to key front-office functions, such as underwriting, policy administration and claims management," said Callet.
Companies at the crest of the wave use alternative sourcing, such as co-sourcing and outsourcing, to accelerate industrialization, says Callet. The trend mirrors what happened in the auto industry, where co-sourcing and outsourcing have become standard practices after their introduction in the late 1980s, he says.
Respondents included executives at property and casualty, life and multi-line insurers in France, Germany, Italy, the Netherlands, Scandinavia, Spain and the United Kingdom.
Eighty percent of respondents represented insurers with annual revenue of more than $1 billion, and 20% were from insurers with yearly revenue between $500 million and $1 billion.
Interviewees included chief executives, financial and operating officers, strategy directors, corporate development directors, and business-line director-level executives.
Source: Accenture
