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Viable business opportunities, such as international expansion, and digital channels—are available for insurers to lower costs, satisfy customers, and pursue growth. Yet, some insurers’ operating models are standing in the way.
Based on Accenture research and experience, top insurers manage two business aspects well: strategy and execution. They have a comprehensive business strategy enabled by an innovative operating model.
A sound business strategy sets forth the carrier’s plan to generate revenue. Influenced by market trends, it articulates the insurer’s deliberate decisions about multi-year business objectives, value to deliver, customers to target, products and services to offer, and go-to-market approaches.
A robust operating model addresses the tactics an insurer uses to execute its business strategy. It defines how the business is organized, what processes and capabilities are needed, how workforce resources are allocated and which information technology platforms will enable operations.
Drawing on Accenture’s experience, this white paper highlights how insurers can rethink and restructure their operating models for high performance.
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Components of many conventional operating models constrain how effective an insurer can be in adapting to volatile markets, executing its business strategies and achieving growth. This makes it difficult for an insurer to attract and keep customers. Data that is duplicated and stored in disparate units across the enterprise also prevents a unified view of the customer or risk, increasing operational complexity.
An innovative operating model, however, focuses on the kind of operational agility that delivers an exceptional customer experience. It connects the dots across four core business components to create value against specified success metrics:
Executed well, such an operating model helps a carrier meet its growth and profitability goals by:
As business models change, so must operating models. An effective operating model is aligned with business strategy, guided by an ability to anticipate customer requirements and responds competitively to market changes. When defining their operating models, insurance executives should ask four critical questions:
Answers to these questions point to design options for the new operating model. While operating model design will differ by carrier, there are a number of leading design practices that all insurers should put in place to improve their efficiency and effectiveness.
Transforming an insurance operating model can be complicated. The approach for some companies will be a series of small initiatives for continuous improvement, while others will choose targeted intervention, with big changes implemented one at a time. A third option is a complete reinvention of the operating model, with large shifts in the organization’s structure to sync up to the business strategy. In any case, transformation impacts almost every aspect of a company and every employee. Without commitment from the top down, game-changing shifts in the operating model will not happen. Inadequate change management or follow-through also puts successful change at risk. P&C insurers can simplify their transformation by taking a holistic approach to change that addresses related issues (ranging from corporate culture to IT) and sets the context for all actions enterprise-wide.
Keys to a successful, holistic execution:
August 22, 2012
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