(By Charles Juniper, Reprinted from the Digitalist Magazine)
Stubbornly slow premium growth, the impact of a Millennial generation with different expectations from the traditional customer base, and the very real threat of powerful new entrants like Google is driving a major restructuring of the global insurance industry. In response to these seismic shifts, many carriers have made significant investments in attempting to become “virtual insurers” over the last few years, mainly by implementing digital channels to service their customers and networks of sales agents, brokers, and intermediaries.
While this has brought benefits, many of these initiatives have remained essentially isolated from the core processing systems at the heart of every insurance carrier. So far, the insurance industry has been slow to rectify this disconnect with complex and inconvenient processes built around inflexible and opaque products still characterizing the experience of many policyholders when dealing with an insurer.
Overcoming a poor customer experience is the primary overall objective of core operations modernization
Given the commoditized nature of many insurance products and the growing competitive threat, a key strategy for many insurers is retaining and growing revenues from their existing customer base – for which a critical element is delivering a strong overall customer experience. Latest research from Ovum reveals that improving the overall customer experience is emerging as the key driver for many core operation modernization initiatives. This marks a significant shift away from the cost reduction and regulatory compliance focus that has characterized modernization projects since the global financial crisis.
The critical focus on customer experience as a goal of core operations modernization is particularly strong in Europe and Central and Latin America, where the continuing weakness of many markets and the more recent slowing in the Brazilian and Mexican economies is driving a clear focus on customer retention.
The goals of core operations modernization reflect the needs of the particular regional markets
Among insurers in the Asia-Pacific region, the ability to launch new products ranks equally highly as delivering a good customer experience as key goals of core modernization. The ability to rapidly introduce new offerings in these growing and dynamic markets is a key operational requirement in the region, but insurers do not see these opportunities as simply a “land grab” as they also attempt to build customers relationships for the future.
The study also revealed a more balanced set of objectives for core operations modernization among North American insurers, showing that they need to use a broader set of more nuanced strategies in order to meet high customer expectations.
Discover the related Ovum report Core Operations Modernization in the Global Insurance Industry.