Legacy modernisation dominated conversation within insurance circles in 2011 and according to research conducted by Gartner, Inc., a leading global information technology research and advisory company, it will continue to be a hot topic in 2012.
“Legacy modernisation accounted for more than 25% of all inquiries made by Gartner clients last year showing that insurers are acknowledging the need to respond to changing consumer demands as well regulatory and market changes. They are also looking to their peers to compare priorities, as well as quantify their own risk and the business value of their individual IT investments,” says Rhys Collins, Head of African Operations for SSP. “The topics raised in the Top 10 Insurance Inquiries From Gartner Insurance Customers in 2011 report are a valuable indicator of the challenges currently being faced within the industry internationally and can be used by African companies to validate their own individual IT investment priorities.”
Cost considerations, time-to-market pressure and regulatory concerns are among the issues driving insurers to balance their IT investments between legacy modernisation and technology innovation. Collins adds that there are two overriding legacy modernisation trends that SSP is currently seeing within the industry.
Firstly there has been a move towards replacing developed core systems with packaged systems. For insurers of all sizes developing their own dedicated policy administration systems from scratch seems to have disappeared. Secondly, instead of implementing an entire integrated suite in one project, some insurers have sought to implement components of a suite, to enhance their capabilities and then replace other parts of their legacy systems over time.
“Today insurers are more open to packaged applications than they were three or five years ago. However this can also be attributed to increased cost constraints and the fact that there are now more packaged applications on the market than ever before. Purchasing a core system is also still considered a major risk by many insurers which is why componentised approaches, such as SSP’s enhance and evolve, have become increasingly popular.”
Another current priority within the international industry is that of online portals/e-services/e-commerce, which together with distribution-related questions accounted for 11.5% of all its inquiries. “The increase in interest in these areas shows that IT investment in front office processes is on the increase. Gartner suggests that this is because insurers will often be able to achieve quicker and more visible business benefits for their clients and channel partners. We agree. By developing online services for their brokers and policyholders insurance companies can move some of the cost out of the business while at the same time improving their service offering” adds Collins.
Collins believes that investing in and implementing innovative e-business strategies will be the key determinant of future growth within the industry. Cloud computing and business intelligence/analytics are also becoming a priority. “Those insurers that are still debating the cost and merit of mobile technology rather than starting to experiment, are being left behind,” says Collins.
“Since the reregulation in developed and emerging markets in 2011, it appears that compliance/risk management will remain a key focus in 2012 and beyond. This is something that resonates with our experience in South Africa. The revised date for full implementation of the Solvency Assessment and Management (SAM) framework means more focus over the coming years. The extent of the issues that need to be addressed and the large number of stakeholders involved in the process is contributing to an extended period of development,” he concludes.