Industry Challenges

The beginning of the new decade has the potential to be the start of a turnaround in the financial health of insurers, but there is still plenty of uncertainty in the industry & it feels as though there’s more water to travel under the bridge before we can all sleep soundly.

Recent results announcements emphasise reduced releases from reserves, pressure on operating profit & declining or at best unstable investment returns. This has led to a focus on costs & an attack on distribution commissions. It’s no wonder then that Property & Casualty insurers must innovate to stay relevant to customers, improve profitability & transform into a business model that can shift with future market changes.

In SSP’s engagement with insurers across the globe it is apparent that there are some common themes that find themselves on the board agenda. These fall into two key categories of attacking the expense ratio & addressing the increasingly complex (& automated) distribution landscape.

With online services, aggregators, hybrid insurers, broker development & emergent MGA’s this is a diverse & changing world which requires insurers to turn themselves ‘inside out’, providing complex online capabilities that were previously hidden within the walls of the insurers building. In the race to provide an ever more elegant & more tailored self-service capability - for a broad spectrum of clients, agents, intermediaries & internal users.

Nowadays, clients also demand services delivered by the web, to phones, & by SMS, whilst insurance brands can be endorsed, or vilified, through social media. In short, it is self-evident that the legacy estates & complex webs of tactical systems that we’re all familiar with are no longer relevant in 2010. With insurers having, on average, 14 separate systems, is it any wonder that the cost of maintaining this estate & the consequential impact on agility frustrates those that run, & wish to adapt, insurers?

And let’s not forget those day-to-day pressures on insurers such as the pressure from regulators, the constant drive for greater cost- effectiveness, the absolute imperative of being ‘agile’ & the hunger for information to refine rates, manage risk & counter fraud. These are summarised in the diagram below:

With lengthy decision timeframes surrounding new initiatives & still a tendency to go for ‘tactical short term’ as oppose to ‘strategic long term’, there is a need to ensure insurers aren’t building the legacy of the future with the consequential impacts on maintenance & agility. In SSP’s view, insurers must face up to legacy-system challenges & adopt emerging technologies to truly support efficient business processes.

Transformational technologies are at the disposal of insurers, so the ability to prioritise investments & construct watertight business cases is critical. With budgets challenged & limited funding for discretionary spending, here are SSP’s portfolio of initiatives that can drive the greatest benefit with a robust ROI

The following represents SSP’s assessment of the key influences that will impact the effectiveness of insurers & the resulting key ratio’s against which they are measured:

Insurers must innovate to stay relevant to customers, improve profitability & transfer into a business model that can shift with future market changes, & it is recognised that in order for insurers to do that, they must face legacy system challenges & adopt emerging technologies to support critical business processes.

At SSP we employ our considerable knowledge, talent & technology on your behalf to help you to compete more successfully in whatever sector of the market you operate in. We’re trusted to provide solutions to 20 of the top 50 global insurers & with our continued product investment you’re assured your future requirements can be met.