More than ever, life insurers are seeking to streamline processes and differentiate themselves from their competitors. Iain Dunstan of financial services technology specialist Bravura Solutions provides insight into the advantages effective use of technology holds for insurers as they strive to meet these objectives.
In periods of economic contraction consumers start to think of life insurance more as a ‘nice to have’ stressed consultancy Celent in a recent study titled Bad News on the Street, Insurance IT and the Financial Crisis.
This brings about a new set of challenges for insurers facing downward pressure on premiums, reduced investment income and decreasing customer loyalty and increasing service expectations.
In a time when consumers are buying less and, if they do buy, becoming more discerning, addressing these challenges is the difference between competing effectively and getting swept away in industry rationalisation.
Now, more than ever, having an effective information technology (IT) backbone that can assist in meeting these challenges by providing an insurer with the competitive advantage of differentiating itself from its competitors is essential.
A key step towards establishing a competitive advantage is recognition of employees as the driving force behind life insurance companies. Within this context it is of the utmost importance that they be equipped with IT systems that allow them to work quickly and efficiently, especially during periods of downsizing.
Solutions such as flexible workflow and automated underwriting capabilities are now essential in order to service customers at a competitive level.
Easy to use systems with less manual processing equate to higher productivity levels and turnaround times and, therefore, more satisfied customers.
The most important factor in creating and maintaining a competitive edge is paying close attention to service levels for policyholders and intermediaries, as well as internal employees.
In times of industry rationalisation it is service levels that differentiate life insurance companies. The provision of fast, easy access to accurate information is the ultimate aim for insurers, and the most effective method for attracting and retaining today’s selective policy holders and brokers.
Today’s consumers expect round-the-clock access to information, and internet-based solutions are increasingly shifting from being a ‘nice to have’ item to an essential service component.
Aside from meeting market demand, online functionality delivers a plethora of business benefits including improved visibility, greater brand presence and reduced call centre volume.
There are also arguments that policyholder portals improve customer retention. The deployment of a state-of-the-art software solution, and the development and consolidation of an online presence for both sales and service, are thus crucial in securing a competitive edge.
The desire to manage books of business and commissions electronically has also put online functionality in high demand with intermediaries; they now expect life insurers to deliver high-end, user-friendly electronic functionality.
The deployment of agent portals is mutually beneficial for the agent and the life insurer; as well as facilitating, and therefore satisfying, agents, it also provides more accurate information, reducing rekeying.
Eliminate legacy systems
A highly competitive marketplace has given birth to a discerning consumer pool with specific demands.
In this era of reduced investment income, decreasing customer loyalty and multiple product choices, insurers are scrambling to win clientele and outdo their competitors. Life insurers are in a race to develop innovative products and bring those products to market quickly.
Legacy IT systems are the main obstacle for rapid time to market; complex legacy code means enhancements and additions require significant and costly programming time and effort.
In most cases it can still take 6 to 12 months to launch a product as a result technology limitations.
The building block or new generation approach to technology readily supports the rapid launch of a broad range of different product types by providing a set of flexible, table-driven, rules-based building blocks that can be configured in many ways without the need to change or build programme code.
Forward thinking vendors are also investing in rules engines that allow product-related rules to be defined in an external, centralised location.
The introduction of these rules engines can deliver a dramatic reduction in the analysis, development and testing effort usually involved with implementing new products.
By deploying cutting edge technology, it is now possible to reduce the new product implementation time frame of a moderately complex product to a mere 20 working days, including testing.
What to look for
Life insurance companies need to choose an IT vendor that understands both their business and current market trends.
The ability to provide modern, superior technology that meets market demands is key.
Particularly in the current economic conditions, employed technology must deliver increased labour and cost efficiencies to life insurers, and enable an improved product offering to clients.
Vital to the life insurance solution of today are online services for policyholders and intermediaries, automated underwriting, comprehensive claims management, framework for integration and services such as Services Oriented Architecture (SOA), integrated workflow capabilities and a flexible user defined product set-up for rapid new product development.
Untangled, flexible technology is a crucial factor in a modern software system.
What can be achieved?
Staying at the forefront of technology can mean achieving a multitude of business benefits.
For life insurance companies it means streamlining processes, achieving improved speed to market and creating a more satisfied customer base cost effectively.
Modern software systems provide long-term relief to the bottom line, delivering cost efficiencies through increased online interaction and through simplified enhancement and modification processes.
Simplified enhancements and modifications also translate to flexibility and ease of product development, improved speed to market and therefore, increased revenue and market share.
An investment in software is also an investment in customer service; online integration, faster cycle times and automatic underwriting allow life insurers to provide their customers and agents with fast, easy access to accurate, real-time information.
While the concept of spending money may seem unthinkable to life insurers in the current financial climate, the old adage “spend money to make money” has never been more appropriate.
An investment now means significant cost savings in the long run, satisfying and continuing to grow client bases, and ultimately weathering the recession.
Iain Dunstan is group CEO and MD of Bravura Solutions
Bravura Solutions makes its mark internationally
Born out of a management buyout of Computer Science Corporation’s Australian wealth management business unit in 2004, Bravura Solutions has grown organically and via acquisitions to become a technology vendor numbering many of the world’s largest financial institutions among its more than 180 customers.
Bravura Solutions has a specific focus on life insurance, superannuation, pension and investment and portfolio administration software solutions and related strategic consulting services.
Headquartered in Sydney, the technology vendor operates 14 offices in nine countries including Australia, China, Hong Kong, New Zealand, Poland, South Africa and the UK, and in the insurance industry serves customers including Aviva, Axa, China Life, ING, Legal & General, Sun Life and Suncorp-Metway. According to Bravura Solutions, over 18 million life insurance, superannuation and investment accounts are administered on its software, with more than A$1.5 trillion ($1.2 trillion) in funds under management.
In 2008 Bravura Solutions reported revenue of A$133.5 million, of which A$85.1 was attributed to its operations in the UK, A$39.9 million to operations in Australia and New Zealand and A$8.5 million to other operations in Asia.