The insurance industry is at an inflection point between operating in a product-orientated marketplace and operating in a customer-orientated marketplace. According to new research from Ovum, a leading global analyst firm, growing customer empowerment, the increasing ubiquity of mobile capabilities and minimal economic growth in developed countries are making it imperative for insurers to embrace customer-centricity.
In 2014, insurers will have to support real-time commercial interactions not only with customers, but also with prospects and sales channels. Insurance sales channels will expect insurers to provide them with the capabilities to create market awareness, generate business and service clients. As customers are increasingly equipped with more advanced smart devices and apps, they are exerting greater influence in their interactions with insurers.
Barry Rabkin, principal analyst, Insurance Technology, Ovum, states: “The old saying that the ‘customer is king’ has never been more apparent in the insurance industry. However, to improve the level of customer focus, insurers’ legacy IT systems will need modernising. Insurers need to integrate systems of record, such as core administration systems, with systems of engagement, such as customer channels.
This will require hybrid systems that combine the two, such as customer relationship management (CRM) or customer experience management (CEM) systems. Data management and analysis, including analysis of variably structured data, will become an essential skill for insurance companies. These systems will not only help in the increasing efforts towards customer centricity, but support mobile sales channels to meet the demands of a real-time marketplace.”
These trends are backed up by Ovum’s ICT Enterprise Insights* – the largest survey of senior IT executives ever conducted – which reveals that 65 percent of insurance CIOs are looking to increase IT spend next year, with legacy system modernisation firmly back on the agenda. Customer channels emerge as the key target for transformation, new installation, or replacement by 44 percent of respondents, with only 12 percent choosing to maintain in the current state.
To build on the pressures associated with increasingly empowered customers, regulators will continue to demand that insurers comply with tightening capital requirements, despite the protestations of US state insurance regulators over adopting European rules.
Rabkin concludes: “It is imperative that insurers cross the inflection point between a product- and customer-orientated marketplace in 2014. However, they will have difficulties in accomplishing this with their decades-old underwriting and core administration legacy systems.”
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Updated Date: Feb 03, 2017 00:15:50 IST