Significant cost savings and stabilized long-term costs are the beginning. More importantly, streamlined operations will help life insurers serve customers better, laying a secure foundation for growth.
As we have discussed, life insurers face a number of significant pressures from customers and regulators, with both new and existing markets making new demands. Flexibility and speed are paramount for high performance, and yet most carriers are hamstrung by legacy systems that are difficult and expensive to maintain, and so not support future strategies. Most insurers recognize they must somehow optimize their operating platforms to equip them for future success. The benefits they are looking for include:
- Reduce operational costs across activities and markets. Legacy platforms are expensive to maintain and upgrade—and modernization efforts are often unsuccessful and add complexity. By contrast, a modern platform introduces efficiencies that typically reduce IT, application and infrastructure costs by 20 to 30 percent, development costs by 20 percent, and service costs per policy of 30 percent.
- Improve speed to market. Today’s customers want their needs met quickly, and competitors are gearing up to do just that. Long product-development times are a luxury nobody can afford anymore. Platform modernization can increase speed to market by 25 percent, and reduce the time to implement new products by two to six months.
- Develop new services using new channels. Speed isn’t all customers want—they also demand the ability to interact with life insurers on the channel of their choice. Product silos with fixed channels are no longer going to be tolerated—customers want seamless, consistent experiences.
- Become technologically nimble and cost-effective. Modern systems use service-oriented architecture, reusable services, cloud computing and “anything as a service” computing models to reduce complexity and drive agility. Capital investment can be shifted onto operational budgets. All of this equips life insurers to reduce costs while serving clients better in every way.
- Improve underwriting and pricing strategy. Better use of big-data analytics and more robust business rules are enabled by modern systems, helping the life insurer model and price its risk more effectively.
- Reduce business and IT risk. The high-performance insurer of the future will be a digital insurer. Eliminating unsupported technology, reducing reliance on specialist resources, minimizing defects and the ability to implement Agile development—all of these reduce the technology risk and thus the business risk.
- Improve investment returns. In Accenture’s experience, platform modernization can yield returns of between 15 percent and 50 percent, with a positive profit and loss balance within two to six years (based on a 10-year amortized platform).
For more information and to learn more about Accenture’s capabilities and experience in this area, please download Reducing costs and time to market through life platform modernization.