New York –
The studies found that for life insurers, expenses per $1,000 of total annual premiums have declined 9% per annum. While the life insurance industry has made some progress with respect to cost cutting and increased efficiencies, there is still opportunity for further change, the study finds.
"Given the increasingly competitive and slow growth environment for life insurance products, cost containment through operational efficiency is considered a top priority for executives," says Joe Guastella, national leader for Deloitte's insurance consulting group. "But it is vital executives recognize that success depends not just on committing to increase efficiencies–it also requires focusing on the ones that have the most impact."
Because expenses are evenly divided among new business operations, customer service operations, and related IT, insurers need to manage the entire business process model, not just one area. The studies also found opportunities to improve service standards, especially in call centers.
"Annuity sales have experienced explosive growth over the short term, which may be masking underlying efficiency issues," says Richard Roth, practice leader for Deloitte's global benchmarking group. "While it can be challenging to try to determine where a system can be made more efficient right when it's being taxed the most, that is exactly the time to seek out the disconnects and redundancies because they are magnified."
The studies revealed several areas that offer annuity providers the opportunity to improve efficiency:
• Reducing the not-in-good-order rate by addressing root causes.
• Expanding the use of straight-through-processing .
• Exploring additional outsourcing opportunities.
• Leveraging eService capabilities.
Source: Deloitte & Touche USA LLP
