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Juggling Act – Half 3: Modernising core platforms for P&C insurers

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In this series of blogs, my colleagues and I will look at the insurance sector in emerging markets with a particular focus on technology, digitization, platforms and ecosystems.

One of the most important problems for insurers is modernizing their core platforms, which in most cases are not suitable for the digital age. The challenges and solutions for P&C and life insurers are different, so I’ll be addressing P&C insurers here and life insurers in my next blog.

Insurance distribution has shifted in recent years – mainly due to changing customer needs and habits as well as the digitalization of the markets. Customers expect to find the P&C products they need online and that those products are easy to use. Few see a great need for agents (although this is less the case with life insurers).

In short, P&C customers want a different relationship with their insurers. This applies to both sales and services where customers expect, for example, to be able to update their addresses or their insurance value online.

The change in customer expectations is therefore an important factor. Another reason is the rise of consumer platforms. These have completely redesigned the distribution of insurance and changed the perception of who customers believe they can legitimately offer them insurance products. For example, many airlines offer travel insurance when you buy your ticket. Hail-fighting companies like Uber, Gojek, and Grab also offer insurance products.

The question is how insurers can access these customers. To do this, they need systems that can be connected to digital platforms and that are fast and reactive enough to meet changing customer expectations. This is impossible with outdated core platforms.

Advantage P & C.

While upgrading the core platforms is essential, replacing them is costly. Here, P&C insurers have several advantages over life insurers.

The first is P&C insurers can buy great off-the-shelf software that makes them more reactive both in creating and selling products, and in serving customers. While the software is not necessarily easy to implement, it can certainly be changed quickly. In particular, P&C players can screw product catalogs onto existing systems in order to quickly create new offers and bring them onto the market. The right digital solutions also offer insurers the opportunity to analyze data for customers in microsegments and address them with customized products.

A few years ago I saw for myself how efficient these systems are. The Malaysian government recently scrapped regulatory premiums, prompting a customer to position themselves more aggressively in the market. For this purpose, a product catalog was installed that allowed the premium ratings to be changed in days rather than months. It was way ahead of its competitors.

Such solutions are also available for incident maintenance and management, with the software running in the cloud to maximize efficiency. A key benefit is that it enables insurers to capture the data they need to use for analytical purposes. For example, a health insurer I worked with can now analyze hospital bills in detail, for example to compare the amount billed for an X-ray with the average cost for that country.

However, these solutions really come into their own by bringing products to market quickly and introducing them to new partners. Consider this: if Uber came to your company for P&C products, could you hook up products to Uber’s systems in a week? This is what digital platforms expect, but few P&C insurers can achieve this.

To become active

The challenge is to choose the right platforms for the needs of P&C insurers. While there are many good software solutions out there, they don’t work equally well for all. In my experience, the most common mistake made is choosing the wrong software for the wrong reasons – resulting in the wrong platform for the needs of the P&C insurer.

The right approach is to make sure you understand beforehand and thoroughly what the potential platform needs to do. Therefore, if you are looking for a software solution, the first step shouldn’t be to create a questionnaire with thousands of questions and hundreds of product specifications and then run the RFP (Request for Proposal) ruler for all candidates based on this level of detail. (I remember a very large company that asked us for an RFP that would cover everything from front-end to CRM to policy management to accounting claims. That was just too unwieldy.)

Instead, it is best to shortlist software based on what your company can provide for the future. In practice, this means developing a selection process based on a few dozen questions and focusing on core functions such as configurability versus coding, technical architecture and APIs, cloud / SaaS availability, before making a narrow list of possible solutions based on factors how pricing and pricing is determined potential. Only then should you undertake a detailed assessment, which should mainly include practical examples, e.g. B. How to create a new product or connect to an external dealer.

This is the approach a customer recently took to get a product catalog that their actuaries can use to configure products without IT intervention. After narrowing down the options, we spent a week showing the actuarial officer the tools. At the end of this week, the actuary redesigned new products from scratch. With the right delivery system, the insurer could roll out these solutions in a matter of days.

I said earlier that the situation is more difficult for life insurers. Stay tuned to find out why and what steps life insurers can take to make sure their core platforms are fit for purpose.

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