Despite the continued uncertain economic outlook, in a world where investment income is minimal and claims costs are increasing, unlike in 2008-09 when cost reduction was a major focus, the last 12 months have seen insurance companies of all sizes focusing their IT investment on delivering business capabilities to drive improved customer service, product innovation and efficiency.
In the past year SSP has seen eight new clients join its existing insurer division customer base of over 130 insurance companies and MGAs as established businesses have upgraded ageing legacy systems and innovative new start-ups have entered the market.
The recent report âInsurance in the UK: the CIO Perspectiveâ from industry analyst Celent confirms this trend. âIf there is a single lesson for insurers from the recession, itâs the importance of an agile and flexible IT operation,â says Catherine Stagg-Macey, senior vice president with Celentâs insurance group and author of the report. âThis has to be in place to support a rapid response to unpredictable operating conditions. Itâs not surprising to see the continued planned investment around core systems, specifically underwriting and product configuration.â
Commenting on the trends, SSP chief executive officer Laurence Walker said: âWith strong competition in their core markets many insurers have started to look at new channels, new product areas or new services, and they want to do this quickly and efficiently. However, to do this requires modern, flexible application technology. The record eight new policy administration system deals in the last 12 months show that established insurers are beginning to address the inherent challenges of using legacy systems and that MGAs continue to view IT as a key driver for success.
âWhatever an insurerâs strategic goals, there is no doubt that moving from a 20 or 30-year-old legacy system to a new policy administration system can be daunting. Yet insurance companies are increasingly recognising that this can be achieved not only as an entire system replacement but also component by component to reduce their risk and capital requirements.â
For MGAs who typically rely on carving out a market niche based on better service, specific underwriting knowledge or their flexibility and speed, the ability to deploy insurance products faster than insurers and allow brokers to self-serve via web portals is key.
âIn the year we helped five new MGAs launch using modern, internet enabled end-to-end insurance systems helping them to bring their products to market quickly with solutions that deliver immediate business value. This next generation of internet based applications are much more open and flexible than older systems and allow MGAs to give brokers, employees and consumers quick and easy access to information. There is no doubt that these start-ups are throwing down the gauntlet to insurers. With change becoming more and more rapid, the replacement or enhancement of core IT systems will remain a key strategic IT project for insurers in 2011 and beyond.â