Life insurers are increasingly focusing on product differentiation, speed to market, reducing operational costs and better risk management, prompted by a highly competitive marketplace and unpredictable equity market performance, according to “Business and Technology Trends: Individual Life Insurers,” a report from research and advisory services company Novarica. Carriers are also paying attention to their aging technology and redundant production systems, the report found.
“As individual life insurers develop their technology strategies, they are addressing system upgrades, consolidation of redundant systems, agent portal capabilities, and STP,” said Tom Benton, a principal at Novarica and report co-author. “These are initiatives that help set insurers apart in the marketplace and can contribute to improvements in financial performance.”
The report offers an overview of insurers’ business and technology issues, includes data about the marketplace and 36 examples of recent technology investments. A list of the top eight technology priorities for life insurers is included.
The core systems map below highlights the areas currently of highest importance for life insurers, reflecting prior investments and a forward-looking assessment of capabilities they are unlikely able to meet.
According to Novarica, the following are among the highest technology priorities for life insurers:
1. Product agility/Product development /Faster product speed-to-market. Improved product modeling and management capabilities.
2. Life policy administration. Replace legacy platform environment with more modern, robust capabilities for core policy issuance, management and reporting.
3. App capabilities. Advanced self-service capabilities improve producer and end customer satisfaction and increase operational efficiency.
4. Business intelligence, improved analytics, and sales performance. Ability to recognize and analyze market trends, product adoption and producer performance.
5. Customer experience enhancements. This includes both distribution partners and end customers. Emphasis is on portal enhancements and mobile.
6. Commissions. Continuous improvement in the area of commissions, to include the licensing and appointment functions.
7. Claims. Accommodate new claims capabilities and support of living benefits payout options.
8. Enable marketing via social media tools. Determining how Web 2.0 should be adopted within the carrier toolset.
“To prepare for a highly competitive, customer service-oriented future, insurers need to focus on strategic core systems investments in the near term,” said Rob McIsaac, a principal at Novarica and report co-author. “The flexibility that will be required to quickly bring new product and service offerings to market will be increasingly challenging with the aging and complex technical solutions in place for many insurers today.”
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