What stands in insurers’ way when it comes to modernizing their core processing platforms?
In my previous blog, I argued that a number of compelling reasons were making it imperative for life insurers to modernize their core systems. Why then are so many hesitating?
The reasons can be extremely complex, but they fit into two broad categories:
- Expense. While insurers may understand the need to invest in new technology, they still need to find the funds to do so. Making a strong business case for this type of investment must be done or the company is likely continue to keep limping along using the current system which still works, after all—albeit sub-optimally.
- Business risk. Technology investment is never simple or easy. Migrating data and processes onto a new platform carries considerable risk, particularly as it’s something so few organizations have any experience with. Botched migrations can compromise customer service, increase underwriting and rating errors, and even spark a decline in new business. There’s also the risk of distracting valuable (and scarce) employees, who hold the institutional knowledge, from their current work. Expert help is to be recommended.
Looked at from another angle, digital strategists or leaders will have to take their organizations through three decision hurdles:
- Is this worth it? They will have to make a strong value proposition, especially for the allocation of capital. In so doing, they will have to demonstrate how platform modernization will enable key business processes and strategies. They will also need to demonstrate how this investment will position the company to become more customer-centric, work better with distribution partners and bring new products to market more quickly. The renewed platform will provide the essential foundation for the company’s drive to become a digital insurer. Accenture’s forthcoming Double the profits may help in this regard—it attempts to link financial benefits to individual digitization initiatives.
- What is it going to take to do this? They will need to identify the resources and assets the company will need, and also the risks—along with mitigation strategies. They will need to gain consensus on what solutions align best with existing technology investments and technology trends.
- Will this fit the organization? The technology strategy will have to be carefully aligned with the business strategy, and the necessary change management strategy clearly mapped out.
In the end, though, the costs and risks of doing nothing might actually be more substantial.
Next time, a look at some scenarios for the modernization journey.
Accenture recently launched the Digital Insurance Network to provide a platform for digital leaders/ strategists in insurance to share ideas and experiences. Read “A digital revolution in the making? Insurance’s next generation of leaders look to the future” by my colleague Thomi Meyer to learn more.
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.