Growing complexity is hobbling life insurers when they need to be more agile than ever.

As we discussed last week, digital disruption, expansion of segments and channels, and a number of other factors are creating increasing complexity in the life insurance industry. The rising tide of complexity is impacting business velocity  at life insurers, and compromising their ability to make smart moves at the very moment when they should be setting up to make a “wise pivot.”

Carriers need to control the complexity in their businesses. But how? Simplifying for the sake of simplifying is dangerous.

To help insurers measure and mitigate the complexity in their business, Accenture’s life insurance team uses a two-phase approach. Each phase has three steps. At the end of this assessment, the insurer is equipped with a refined, detailed execution plan to help them conquer their complexity.

Here’s how it works.

Phase One

The first step in the process is to isolate the true divers of complexity. This begins with an analysis of the insurer’s operations by channel, by product, and by segment. Once we understand a life insurer’s key performance metrics and financial data along those dimensions, we identify capabilities and areas having the greatest value-at-stake, and group end-to-end processes for further analysis.

The second step is complexity analysis. This starts with the creation of a Complexity Value Stream Map, or CVSM. Once the CVSM is built, we identify and score key root causes driving both good and bad complexity.

The final step of this phase looks at identifying the potential opportunities to reduce complexity. Benefit-versus-effort matrices are constructed to prioritize the steps the insurer could take, which play an important role in Phase Two.

Phase Two

Phase Two’s objectives are to assess the potential business and technology solutions identified in Phase One; understand the costs, benefits, risks and effort required to deliver each; agree on solutions to be pursued first; and, build a detailed roadmap for change. This starts with establishing a fact base and key value levers to  drive the assessment analysis for each opportunity.

The second step of this phase is the formal construction of recommendations for action and the associated business case.

The final step is to build the roadmap for complexity reduction after each recommendation has received a “go” or “no go” decision from the insurer. This process identifies any interdependencies present in the recommendations, which are reflected in the roadmap. It also establishes a governance structure for avoiding “complexity creep” in the future.

Dealing with complexity in life insurance business can seem daunting. That is why starting earlier rather than later is a smart move. To begin the conversation about evaluating and managing complexity in your business today, please contact me.

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