Over the next few years, major shifts in demographics, economic power, regulation and technology will fundamentally restructure the global insurance industry. The question is, how can insurers survive and thrive in this new world?
Consider the fact that significant growth is expected in emerging economies like India, China, and Latin America, where hundreds of millions of new customers will be entering insurance markets. At the same time, Millennials across all geographies are entering markets – and they come with a whole new set of expectations around convenience, transparency, flexibility, and control.
Make no mistake – going forward, insurance firms that are able to efficiently assess and enroll massive volumes of new customers, while delivering exceptional customer experiences, will have a serious competitive advantage. They will disrupt markets for even the largest and most successful insurers still burdened by legacy systems and processes.
According to a survey of 530 senior insurance decision makers conducted by Ovum on behalf of SAP, most insurers are still running multiple and fragmented core systems, with 41% of all carriers operating 11 or more core operations platforms; 30% of carriers have a core operation environment comprised primarily of in-house developed systems. Meanwhile, insurers in emerging markets are aggressively implementing SaaS and cloud technology in order to bring about rapid transformation of their core operations. According to the survey, 23% of carriers in emerging markets plan to use cloud to support the majority of core processing within 24 months, nearly twice the proportion in North America and Europe.
Ovum’s analysis suggests that a majority of carriers will be at a competitive disadvantage for the next three years. So it’s critical that insurers accelerate their core operations modernization initiatives now. As shared in the paper summarizing the study’s findings, Ovum believes that insurers need to carefully consider the best platform, or approach, for modernizing their operations.
One way to jump-start the process is by including SaaS and cloud technology in their core operations modernization plans. This is particularly critical for carriers in mature markets, who, at the very least, should be implementing SaaS-based core operations proof of concept projects now. This way, they will be ready to deliver organizational benefits in the near-term, as well as to develop the in-house technology skills and experience needed to get the most from these solutions.
What’s your assessment of your firm’s technology readiness to meet new industry demands? Be sure to read the full Ovum paper “Core Operations Modernization in the Global Insurance Industry” sponsored by SAP (minor registration requirement). Also see how SAP for Insurance is helping insurers today with their core operations transformation. Please share your questions and insights.