In a new report,'Life Insurance Core Modernization', underwritten by Equisoft, global research firm Celent presents the findings of an interview series aiming to understand how life insurers reached the tipping point in making a decision to move forward with the investment in a modern policy administration system.
The research was conducted with selected IT and business executives at large and mid-sized companies offering individual life, annuities, preneed, as well as group and voluntary products.
Many insurers are at a precipice in their need for a new core system and it will be very difficult to remain competitive while using technology that is long unsupported, in languages no longer in use, run on a complicated and expensive mainframe, and supported by people nearing or past retirement age.
The primary goal with this research was to find consistent themes across insurers and identify how companies convert known intangible into tangible benefits that can be monetized.
Unique technology challenges facing life insurers
As stated by Celent, “Life insurers are facing a much longer-term challenge than their non-life peers because they have in-force policies on their books that might have been sold 75 years ago, and policies sold today that could be there for another 75, creating a 150-year problem.”
Companies have spent years working to maintain their aging infrastructure but longer-term considerations about retiring their legacy systems and migrating their data to a modern platform have been turned, almost overnight, into issues that need to be addressed today.
Customer expectations have been heightened by their online interactions in other industries, and in a time of physical distancing, the traditional face-to-face meetings to gather customer information, illustrate concepts, complete applications and obtain signatures are no longer possible.
Integrated digital front-end tools and automated workflows are now required to optimize the entire sales process.
Celent’s APAC insurance technology expert, Max Ang said, “The insurer of tomorrow will be a technology-focused enterprise, augmenting current experiences with digital tools and automation, and with collaborations with partners for success. The next-generation insurer will serve, and customers will engage, based on the evolving needs required.”
Rana Biswas, APAC Vice President, Wealth & Insurance Solutions at Equisoft added, “We work with dozens of companies across regions that have 20, 30, even 40+ year-old legacy systems. The tipping point for most of them was realizing that patching their outdated systems on an as-needed basis was not only a resource and cost intensive effort, but one that barely allowed them to maintain the status quo. Insurers need a modern, connected, and configurable policy administration platform to truly compete and thrive in today’s world, and we’re happy to see an increasing number of companies making the move to a fully digital environment.”