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Changes in the current economic climate continue to pose challenges for life insurance and annuity carriers in their quest to improve cost management practices and respond adequately to regulatory pressures.
Changes in the current economic climate continue to pose challenges for life insurance and annuity carriers in the quest to improve cost management practices and respond adequately to regulatory pressures.
The difficulty of attaining growth and profitability in such an environment will intensify in the coming years. Contributing factors will be slow GDP growth, intensifying competition and an increase in regulation. To reduce IT spending and meet compliance requirements, the right software platform and technology infrastructure is needed.
In part two of Accenture’s ‘Technology trends in the life insurance industry’ series we discuss a number of software trends that are among the most important in the life insurance industry.
Read Technology Trends in the Life Insurance Industry - Part One [PDF, 1.5MB]
Insurers will be in a better position to achieve growth and profitability if they address these trends and concerns:
Standardizing and simplifying the IT infrastructure for more effective service at lower cost - Most insurance CIOs are seeking to consolidate and rationalize systems onto a single platform, or at least to move significant percentages of systems onto fewer platforms. Consolidation is needed to achieve simplified and standardized product functionality.
Improving data capture and reporting to respond to compliance demands - In the wake of the financial crisis, scrutiny over the movement of money grows even as companies increasingly conduct business across borders. As a result, compliance and the risks of non-compliance, will become more important. The right software platform or managed-service approach to operating underlying software can remove the complexity and headache of compliance.
Creating a more agile organization - Insurers need business and software solutions that are both robust and flexible while being readily configurable to create a more agile business. Several features of an insurance software solution are especially important in creating such agility. First, the software must support end-to-end functionality in an integrated manner. Second, the entire solution must be delivered in a componentized way to facilitate maintenance, enhancement and replacement of the system over time.
Supporting global expansion and a multi-country operating model - More than three-quarters of insurers say that international expansion is a critical or important driver of economic value. Technology platforms requirements are becoming increasingly global as different regions catch up with each other in terms of technical capabilities. Systems need to look and act like local market systems while at the same time providing global consistency and economies of scale.
Dealing with changing value propositions and the threat from aggregators and direct insurers - Longstanding attitudes towards distribution leave life insurers vulnerable to other kinds of models such as fee-only planning, “life coaches” or aggregator models where companies act as intermediaries and offer customers a selection of insurance products at the lowest rate possible. To survive, insurers need to be a part of this shift. Nimble and flexible software is vital for carriers who do not want to be left behind.
March 23, 2012
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