(By Charles Juniper, Reprinted from the Digitalist Magazine)
As insurers increasingly focus on delivering a strong, consistent customer experience as the primary goal of core operations modernization, identifying the most appropriate systems architecture to enable this becomes a crucial question. Latest research from Ovum conducted on behalf of SAP and based on interviews with over 500 senior decision makers from the insurance industry examines this issue.
The integrated channel platform model emerges as the preferred solution for many insurers
The study reveals that 42% of insurers are attempting to implement a core processing architecture that integrates communications channels and core processing within a single platform. This ‘integrated channel platform’ model aligns well with the strategic goal of enhancing the customer experience and was strongly favoured among European and Central and Latin American insurers.
While a model that integrates digital channels, core processing and other functionality, such as customer analytics within a single platform, was the preferred choice of 29% of insurers highlighting a general trend towards more integration, it does show that carriers lack complete confidence in the maturity of this type of offerings currently.
Insurers in emerging markets are using cloud to rapidly implement core operations architectures
The study also revealed that for almost half of insurers it will take at least two years before they can support the business with the most appropriate core processing model. This leaves many insurers at a significant competitive disadvantage and exposed to the threat from either carriers that are further advanced in their core operations transformation or from new entrants from outside the insurance industry, such as Google.
SaaS- based core operations platforms running on cloud infrastructure provide a means to move quickly to an integrated channel platform while minimizing initial capital investment. Insurers have been strong adopters of SaaS and cloud technology across the wider organization, but the study shows that only 6% of respondents are currently using the technology specifically in support of core operations. However, insurers in the emerging markets are being far more aggressive in the introduction of cloud to support core operations, with 24% and 19% of respondents in Central and Latin America and Asia-Pacific respectively moving toward the majority of core processing being performed on cloud within the next 24 months. This compares with only 10% of North American and 12% of European respondents.
Charles Juniper, Principal Analyst OVUM, shares his insights on digital transformation in the insurance sector in this video
Discover the related Ovum report Core Operations Modernization in the Global Insurance Industry with the accompanying Infographic