Earlier this month, we hosted our first Special Interest Group meeting of the year, which focused on individual life insurance carriers. These virtualized events bring companies from across North America together to explore new Aite-Novarica Group research and to dive deeper into key challenges, and opportunities, confronting carriers in the emergent late-pandemic era.
A number of key themes emerged during the session. The most significant included:
Modernization is both real and critical to future-state business strategies.
Technology isn’t like fine wine; it doesn’t get better with time. While modernization was a theme before COVID-19, insurers have realized during the pandemic that the time to redouble efforts in this space is now. Across many industries, a silver lining during the COVID-19 experience has been the rapid acceleration of digital advancement.
This has changed end-user expectations in ways that legacy environments aren’t equipped to handle. A rapid shift in these long-liability-tail products isn’t a practical possibility, which leads to discussions on appropriate implementation strategies. Greenfields, parallel environments, and BPO options are all viable depending on the underlying business priorities. The crux of any modernization effort is the need to address a wide swath of data-related issues to create good and effective experiences. Without good data, any digital strategy a carrier might employ risks becoming a corporate failure.
Movement of core processing environments to cloud-based platforms is accelerating.
There was a time when being able to effectively manage complex operating environments at scale allowed carriers to drive operational efficiency and create competitive advantage. Ironically, in this era, time-share computing allowed expensive computing resources to be allocated for many end-using entities. Cheaper alternatives have evolved rapidly over the better part of the last half-century, leading to a world where insurance carriers are looking to effectively go “Back to The Future” and get out of the data center business.
While emerging at different paces based on both line of business and carrier size, the trend toward cloud-based platforms is clear. This has significant implications for how carriers acquire both commercial solutions and the human capital to support them. Moving to cloud also makes it possible for carriers to adapt things like product development and deployment processes to move faster while delivering financially attractive results with lower volumes of sales. This increased level of adaptability is important in a rapidly changing and diverse market.
Resource availability, both internal to carriers and for strategic partners, remains a major concern.
Across all lines of business, and all geographies in North America, human capital issues are very much top of mind. The Great Resignation continues. It is also a phenomenon not limited to one region, with countries like India and Ireland experiencing high voluntary turnover rates. The war in Ukraine has further dislocated key pools of talent in Eastern Europe, which has significant implications for both carriers and solution providers.
Considering an array of alternative approaches to talent development, both domestically and internationally, may be key for IT organizations looking to build both resilience and competitive advantage. Knowledge management is also a critical talent issue as carriers face the reality of younger Baby Boomers and older Gen Xers moving rapidly toward retirement eligibility.
The pace of change in many aspects of the insurance industry is accelerating, even as the useful life of technology is getting ever shorter. As our recent Special Interest Group session highlighted, there are great opportunities, and challenges, ahead. If you’d like to discuss this, or future, Aite-Novarica Group events in more detail, please reach out to me at [email protected].