10 Insurance Technology Imperatives
The primary business drivers on the minds of most CEOs in the insurance industry are profitable, sustainable growth; customer service that is agile enough to meet changing demands; and business optimization with a scalable processing infrastructure, according to SMA research.
It would be nice to be able to identify one simple technology that would drive such success for insurers. Unfortunately, today's insurance ecosystem is complex. There is no one-size-fits-all magic priority. Instead, there are a series of IT imperatives that every insurer must address now if they want to stay competitive. The actions must link technology to the key business capabilities required to create value.
The Top 10 Imperatives
In more than 100 hours of interviews, executives across the entire insurance ecosystem consistently cited these top 10 initiatives as they position their firms for market recovery and prepare to handle the external forces changing insurance and technology:
1. Chart a course to profitable markets. Leverage market intelligence to plot a position for growth.
The path to profitable growth goes far beyond marketing. It requires employing data, tools, engines and process automation across multiple capability areas to ensure that you select the right market opportunities and risks, determine the right pricing, and deliver the right management and service.
2. Put the data to work. Make the business vision a reality with shared, common, quality data.
To remain competitive, an insurer's data must be clean, available, usable and meaningful -- meaning, it must be integrated and shared so users can take the right actions and make the right decisions. Formulate a data game plan, manage it with a modern architecture, exploit it via tools and engines, and augment it with more data and analytics.
3. Rethink legacy. Use a modern application architecture -- choose a best-of-breed, best-of-enterprise or hybrid set of solutions.
Despite years of replacement intentions and efforts, legacy systems live on. Now is the time to capitalize on advanced technologies and new solution offerings that make it easier to address legacy challenges and even facilitate applying intelligence and smart data. Consider using new approaches based on a modern architecture and a data game plan as a total solution, a foundation for best-of-breed plug-and-play components, or a hybrid approach.
4. Fast-track new product development. Remove the technology obstacles.
Staying competitive means delivering insurance products that meet customers' specific needs. Gain an advantage by rapidly developing and revising products while managing the product life cycle. Leverage, speed and agility come from a central, shared repository of data, rates, rules and forms.
5. Drive dynamic distribution channels. Navigate and manage expanding channels.
The paradigm shift in distribution channels continues as connecting technologies converge and collide. The industry is being challenged by customer expectations that are largely being set outside traditional insurance boundaries. A clear strategy is essential in today's exceptionally dynamic world.
6. Apply knowledge to underwriting. Balance science and art.
Precision insight is not only an advantage; it also is a weapon. Integrate data, tools and engines to provide the business intelligence that people and automated processes need to take the right actions and make the right decisions.
7. Capitalize on intelligence to manage losses. Sound the alarm early and give great customer service at the same time.
Integrating and managing all dimensions of the typically fragmented and siloed claims processing area reduces expenses. Improve customer satisfaction by using personalized views, adjustable processes and sharable services. Apply external data, analytics and intelligence to manage severity, improve cycle time and recover losses.
8. Holistically link customer communication. Integrate voice, data and paper interactions with channels and processes across the enterprise.
Linking all customer touch points and interaction methods holistically yields benefits beyond customer satisfaction by driving more business, reducing loss and increasing profitability. Information flows need to be seamless and incorporate all forms of interaction, integrating voice and data and accommodating traditional and ever-changing new channels.
9. Benefit from business optimization. Stay ahead of the competition -- improve speed to market, reduce costs, enhance service and position for growth.
The mind-set in the insurance industry has long been geared to sequential processes that are often driven by technology. Shift to a business view. Rethink how capabilities align to desired outcomes. Drive operations from the customers' viewpoint to create a more dynamic and responsive business model. Examine individual activities to determine if you can eliminate, automate or delegate them. Then apply the right level of technology to drive both top- and bottom-line growth.
10. Make governance work. Link business and IT to ensure the right investments -- right projects, right time, right technology.
Turbulent market conditions and fierce competition are making it even more important to closely manage the direction of the business, get it right the first time and carefully focus IT investments. Achieving success means more than aligning the business with IT; it also requires linking strategy to capabilities to IT investment.
Call to Action
Getting started is not easy, but there will never be a better time to take a breath, evaluate and chart the business course. The key is to get started -- now.
The first step is to lay out an IT road map. It does not have to be highly sophisticated, but it must outline the priorities for the business and then align IT investments to fuel the capabilities for your strategy. Two enablers are at the core of the top 10 imperatives: a data game plan and a modern architecture.
Data is the lifeblood of the industry. Clean, sharable, standardized data forms the base for applying intelligence and analytics to every step of the business.
Today, a modern architecture also is mandatory; it makes it easy to use plug-and-play solutions for add-on components and data tools. This foundation of platform independence sets the stage for flexibility and responsiveness in the coming years.
SMA is a Boston-based strategic advisory firm offering research and consulting services to the insurance industry. This content is adapted from recent SMA research. For a complete copy of the report, visit strategymeetsaction.com/our-research.
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