Embracing modernisation

As consumer behaviour and expectations change radically, the insurance industry must respond to their changing demands by developing products, finding new ways of getting them to the end customers, and new ways of working with business partners.

Innovation in the insurance industry may seem simple but for general insurers and their business partners, innovation doesn’t just mean something new. It means something new that helps them do business better, and respond effectively to changing customer needs and expectations.

“Many companies across the industry are struggling with out-of-date systems and creaking architecture which makes innovation a big ask,” says Rhys Collins, Head of African Operations for SSP.

“Yet,” he says, “there are numerous areas where insurers need to innovate now. It’s about the products they sell, the way they manufacture them and bring them to market, the way they work with business partners, and the way they respond to drastically changing customer needs and expectations.”

Collins says to be ahead of the competition, insurers need to be easy to do business with. “Insurers that can provide prices in real time via partners or via mobile technology are going to be able to take business from those that are slower,” he says.

One question for insurers is how they can embrace their business partners. Brokers are a good example: the more processes that insurers enable brokers to carry out, such as pricing, or administering policies and claims, the more they are going to use that channel. “If insurers are not able to support brokers effectively, they will go somewhere else,” says Collins.

This is a very real problem for insurers. A broker looking to develop a scheme, for example, could well choose their insurance partner based on that partner’s ability to offer the right systems to administer the scheme efficiently and how quickly they can develop the product. By providing in-house staff with more user-friendly tools, insurers can greatly improve their response times.

At present the product development cycle typically takes between nine and 12 months, by which time today’s impatient consumers will be long gone. However, by giving business users who are identifying, creating and launching new products access to more intuitive tools that require little or no coding, time to market can be reduced to an average of four to eight weeks for new products and two to four weeks for cloned products.

In recent years, insurers have had to overhaul their e-trading capabilities, developing user-friendly extranets and offering products on different platforms to protect their marketshare.

A recent global report by consultancy Celent, based on interviews with chief information officers, found that 78% of respondents were investing in e-commerce initiatives. These included new or updated broker portals; more automation, including further integration with broker systems; new products designed specifically for channels such as aggregators; and expanded customer portals offering self-service.

As well as developing new e-trading capabilities, insurers are updating their in-house systems. Collins says almost half of the CIOs interviewed for Celent’s report had investment planned or under way to replace core systems, such as product engines, rating and policy administration. Collins says this highlights the fact that current legacy architectures are unable to support insurance businesses with their product development cycles. “Whether an insurer needs to create a new product or amend an existing one, legacy technology platforms prevent key releases being made in a timely manner,” he says.

Collins also points out that most large insurers are formed through mergers and acquisitions, giving them the additional headache of multiple systems to contend with. Overhauling them is not a simple process, with some transformation programmes taking a number of years to reach fruition, but the business benefits will be tangible thereafter.

“It’s about finding best-of-breed components and starting to replenish and move to a standard suite,” says Collins.