If you read Part One in this blog series: the Life insurance platform modernization: A must for high performance, you know that insurance equity analysts expect the market-leading life insurers to grow at a significant rate. Did you also know that those same leaders are expected to achieve a return on equity well in excess of 10 percent? The difference between the front-runners and those struggling to keep up is, in many cases, the engine that drives them.
Achieving goals, exceeding expectations
A modernized life insurance platform can help achieve a number of critical objectives, including:
- Reduced operational costs. Legacy platforms are expensive to maintain and upgrade. A modern platform can typically reduce IT operating costs by 20 to 30 percent, application and infrastructure costs by 25 percent, and service costs per policy by 30 percent.
- Improved speed to market. Platform modernization allows life insurers to swiftly modify existing products and launch new ones, reducing the time to market by two to six months.
- Efficiently provide new, innovative services. Consumers want a variety of channels when interacting with their insurer. An optimized platform replaces product silos with a customer-centric operating model, improving transparency and convenience.
- Be technologically nimble and cost effective. Modern systems bring advantages like service-oriented architecture (SOA) compliance, the ability to reuse common services, and quicker transaction time. They also deliver an integrated multi-channel distribution capability.
- Improve underwriting and pricing accuracy. Modern systems help insurers gain a better understanding of the risks they cover by providing more sophisticated analytics and a more flexible and robust underwriting rules capability.
- Reduce business and IT risk. Modern platforms are better able to report on risk and comply with regulatory requirements.
The below charts illustrate the typical benefits of platform modernization:
Most insurers recognize that they need an optimized operating platform to meet these objectives—yet so many are still reliant on old systems. What’s standing in their way? Often it comes down to two reasons. I’ll share what those are and how to approach them next week.
To learn more in the meantime, download Reducing costs and time to market through life platform modernization (pdf; opens in a new window).