NEEDHAM, Mass. -- Many executives concede that their companies are late in automating the life insurance underwriting process, according to a survey by the Needham, Mass.-based TowerGroup consulting and research firm. TowerGroup worked on the study in partnership with Insurance Networking News.
The survey of executives, who represent a variety of life insurance products, reveals that growing revenues, improving profitability, and driving operational efficiency head the list of strategic business initiatives. However, TowerGroup discovered that life insurers feel that technological inefficiency constrains their ability to meet those goals. What’s needed, they say, is IT investment to support product management, operations and distribution.
"Although TowerGroup finds that the life insurance industry has strong growth potential--based on converging trends in products, demographics, and distribution--insurance carriers are being held back by their inability to bring life insurance products to market quickly and to underwrite new business efficiently," said Cindy Saccocia, research area director of the Insurance research service at TowerGroup. "The survey results demonstrate the importance of investing in technology that can support these key areas."
Highlights of the survey include:
* Life insurers face a common set of challenges in the underwriting process, relative to product management, operations and distribution. Those challenges range from making better and faster changes to business rules, to ensuring compliance in a tough regulatory environment and to pushing enhanced products and services through delivery channels. Most respondents say they hope to make improvements to those core business issues within one to three years.
* Yet the survey also revealed disconnects between how executives view business and IT strategic initiatives. Though product management is critical to meeting top business objectives, a surprising number of respondents ranked this area as a last priority on the technology front.
* Business process management, modernization of legacy platforms, and infrastructure consolidation are IT strategic initiatives critical to supporting functional areas in the life insurance underwriting process.
"Carriers must clarify their understanding of the needs of product management so they can better determine what technologies are required in order to shorten the development and life underwriting cycles,” says Saccocia. “Only by fully appreciating the internal obstacles to achieving optimal underwriting performance and outcomes will carriers be able to overcome them."
The study polled 3,000 Insurance Networking News subscribers on business and technology readiness in the life insurance business, garnering a 1.5% response rate representative of the overall industry profile.
The survey was fielded to identify the technology that life insurance companies need to maintain or improve their competitive position and to assess how much change insurance executives desire or plan in the next five years.
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