Our experience in working with P&C, Life and Auto Insurance firms has given us deep insights into some of the key challenges faced by these carriers:
- Simultaneous Need for Growth and Profitability
Insurers today must simultaneously rebuild capital and grow revenues. That means evaluating their existing business models and product offerings in order to achieve the optimal use of scarce capital, according to Hollander. The CIO's imperative is this "do more with less," which involves not merely efficiency, but more effective ways of performing business functions. At a time when insurers must move toward a more comprehensive view of cost reduction, CIOs need to focus on the ways technology can support core operational transformation.
- Increased Focus on the Customer
Virtually all insurers are moving toward a more customer-centric view of their products and services, and technology is a critical enabler of novel approaches to customer segmentation, of retention strategies and cross-sell strategies, and integrated and cross channel customer servicing. Simply put, technology is the means for insurers to deal with customers anywhere, anytime, on their terms. Many insurers are struggling to find the right organizational structure to enable and improve multichannel distribution and deliver a consistent customer experience.
- Increasing Regulatory Demands
Insurance management teams will confront several key challenges related to the complex and changing accounting, regulatory and tax regime environments in which they operate in the wake of the financial crisis, Dodd-Frank and healthcare reform, and in anticipation of the NAIC's Solvency Modernization Initiative and Europe's Solvency II.
- Competing on Data Analytics
Whether or not insurance can be said to have truly entered the era of "Big Data," insurers need to get better at data analysis across the enterprise. They need more detailed and reliable information internally to manage their business, and they must review their information strategy with regard to the potential of an increasingly wide range of external sources of data.
- Cost Reduction
Increasing competition especially coming from players with highly automated (sometimes totally online) operations has put tremendous and ongoing pressure on market prices of insurance and hence, the costs of operations. A major cost of operations comprises operational personnel, IT systems and databases. There is an ongoing demand to reduce the operational costs by streamlining the complex operations and IT systems.