The Short-Term Insurance Industry – Elix-IRR
Article Synopsis :
Increasing regulation, tight competition, and customer demand for new digital capabilities such as online self-service, price comparison, and social networking are combining to put the operational squeeze on general insurers.
In “The Short-Term Insurance Industry: Organising by Common Capability”, the Elix-IRR team demonstrates how insurance companies, particularly short-term insurers, are transforming to remain competitive in an increasingly challenging market. The paper primarily focuses on:
- The pitfalls of legacy organisational structures
- How claims efficiency relies upon an organisation’s IT infrastructure
- The benefits of consolidating operating models by common capability
- Successful examples of transformation programmes in the insurance industry
- What insurance organisations can learn from other industries
Market forces are prompting organisations to change business and operating models, ranging from tweaks to complete overhauls. Critical success factors identified and discussed in the report are:
- Implementation of effective governance structures and reporting systems
- Investment in processes and technologies to comply with new regulations
- Unconstrained thinking with respect to operating models, existing and new
- “Total cost to serve” as a KPI, taking into account both cost of claims and operating costs
- Tighter alignment of IT investment to business strategy to meet evolving customer demands
- Shared-service options to reduce overall operating expenses
Examples of successful transformation programmes within the insurance industry by Lloyds, Aviva, Aegon, Direct Line, and Zurich related to customer service and claims management are shared.
Out-of-industry examples of transformation from Virgin, Cisco, Boeing, and Mercer are included to help insurance readers expand their thinking around the possible.
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Digital Insurer's Comments80% of insurance investments in IT over the last twenty years have gone to the back office. The problem is insurance IT is becoming a front-office game and siloed legacy systems impede more than enable.
As an insurance executive a good question to ask yourself is: if I were to start my business from scratch today, with only my existing customer base, what would my operating model and supporting IT look like? You wouldn’t be running your own data center, for starters. You may also be renting most of your apps, probably spending more on IT overall with a far smaller in-house IT department.
Organisations that take a step back, critically evaluating their current business and operating models, challenging the ‘norm’ or traditional way of doing things, are better placed to make the bold, innovative decisions required to thrive in the digital age.
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