The individual life marketplace continues to be hyper-competitive with technology playing an ever larger role in insurers’ ability to attract, retain and profitably serve clients. With the release of our new Business & Technology Trends: Individual Life report, it is an ideal time to highlight six technology priorities in this area.
More robust policy administration
Replacing legacy platform environments with more modern, robust core policy issuance, management, and reporting capabilities is pivotal to properly positioning carriers for the future. While many aging, generally mainframe-based systems, remain capable of supporting basic policy processing and accounting functions, the costs associated with enhancing them are becoming increasingly problematic. Of potentially even greater concern, the risks of continuing to try and enhance these systems using aging technological underpinnings can create both resource challenges and delay getting capabilities and new products to market in a timely fashion. With cycle times turning ever faster, these platforms simply create competitive disadvantage.
Application capabilities
Carriers are targeting key improvements in both producer and end customer satisfaction, concurrently looking to increase operational efficiency through advanced self-service capabilities. One critical focus is on e-applications and increasing straight-through-processing through new business and underwriting. Carriers are also implementing e-signature and e-delivery capabilities to enhance user experiences while reducing costs and improving throughput. Across the spectrum in financial services, better service is frequently tied to user-controlled self-service which can both reduce turnaround times and error rates, something that is especially important on equity based products such as variable / universal life.
Business intelligence and improved analytics
Successful carriers are using business intelligence and analytics solutions to recognize and analyze market trends, product adoption, and producer performance. They are using it to draw out data that has been locked in legacy system silos, to evaluate the potential to change the new business underwriting process, and to assess the effectiveness of agent and field management compensation programs. This increasingly becomes an imperative as carriers look to both better understand (and reward) the appropriate types of behavior in increasingly complex and diverse distribution channels. Customer analytics can also allow carriers to build greater levels of customer “intimacy”, assisting in the identification of “next best offers” and activities that could be a prelude to financial events (e.g., a lapse) that might not ultimately be in the policyholder’s best interest. Rather than simply processing transactions, carriers will need to be able to assist in making the right decisions in the future. Amazon and other online retailers have already taught consumers what is possible; now carrier need to catch up in order to assure future relevancy.
Distribution and compensation management
Carriers are continuously improving distribution management functionality to include licensing and appointments, as well as support for greater flexibility around the frequency of both commission calculations and actual payments in compensation plans. Complex hierarchies remain an issue for many carriers; new and improved distribution management platforms allow carriers to more effectively link actual performance and desired results to improve bottom line financial results. They can also allow carriers to bring information together across previously disaggregated product silos or policy administration environments to drive better performance at a lower operational price point.
Claims
Carriers are accommodating new claims capabilities and support of living benefits payout options as well as replacing aging repetitive payout systems. While claims systems have not historically been at the forefront of planning, a combination of regulatory imperatives, market changes driven by concerns such as the Affordable Care Act (PPACA), and a desire to break the large problem of legacy systems down into more discrete consumable components primed for replacement is leading carriers to place increased importance on this space. Interest in this space has been steadily growing and is likely to continue as shorter tail products offer carriers and opportunity to make more direct connections between how they underwrite risks and the losses they subsequently experience.
Architecture and integration planning
While not a discrete system, increased focus is now being placed on developing a discipline that will allow of the integration of new capabilities, at times in concert with legacy platforms, which will allow carrier to transition workloads or functionality to new solutions in a staged approach, avoiding the notion of a Big Bang event. This also allows carriers to operationalize a new reality: the systems being deployed today will not have anywhere near the useful operational life of the systems they replace, particularly those implemented in the 1960’s-1980’s.
The technology priorities listed above are based on the expertise of Novarica’s staff, conversations with members of the Novarica Insurance Technology Research Council and a review of secondary published resources. To download a free preview of our new Business and Technology Trends Individual Life report, visit:
On Monday, May 18th at 2 pm (ET) I will present and discuss findings from this report on a free webinar. Interested participants should pre-register online at:
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