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Platform rationalization is critical to unlocking high performance in life insurance. But rationalizing to one platform is typically not affordable, not deliverable—and not necessarily desirable.
For life insurers, the ability to drive change and innovate is a necessity. One of the biggest challenges to developing these capabilities is the complexity and multiplicity of policy administration systems.
Accenture research shows that 38 percent of life insurers have already rationalized their policy platforms, with nearly as many implementing a defined strategy or actively discussing consolidation. Those that have successfully achieved system consolidation report major benefits, including cost savings on infrastructure and reduced operating costs. Notably, they also report a faster time to market for new offerings.
Amid these wins, there are some challenges. This point of view provides insight into these challenges and offers recommendations to ensure optimal results.
For many life insurers, product innovation has been a primary growth driver. Yet, in striving to extend the breadth, depth and complexity of product offerings, insurers have also found themselves mired in a legacy of multiple policy administration platforms. In addition to the financial cost of running multiple systems, having disjointed platforms affects life insurers’ ability to innovate.
In a market where innovation, agility and adaptability are critical for success, it is important for carriers to tackle platform consolidation.
In our experience, life insurers have struggled most when trying to migrate to a single platform for all product sets. Accenture recommends separating products—not by type, but by complexity.
The requirements of complex and simple products are distinct. Consider that:
Complex products might be sold through one or two channels, while simple products are likely to be sold through a variety of sales channels.
Complex products require complex development—which is opposite to the nimble responsiveness that drives simple product development.
Complex products often demand a personalized approach, whereas simple products are well suited to greater automation and standardized product features.
By separating complex products from simpler, lower-cost products, carriers can develop an optimized approach that drives high performance. This means examining the requirements of particular products and ensuring that the essential features of the platform are developed to support them.
Platform rationalization can enable life carriers to manage costs, improve efficiency and increase flexibility, but it must be driven by the demands of the business and its strategy for the future. For optimal results, platform rationalization must be considered in the context of business goals, and a carrier’s current and future target markets.
Accenture believes that the best results come from a multi-disciplinary team that can align business drivers, system capabilities and implied dependencies. This team requires people with knowledge of:
September 13, 2010
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