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Be Nimble, Be Quick - Driving Agility in Insurance


The insurance landscape is evolving rapidly and is fraught with challenges. Insurance providers are required to deliver swift, effortless engagement, ensure enhanced user experience and timely responsiveness, and adapt to match fluctuating market demand. Add to this, the increasing regulatory and compliance environment. Dealing with these issues requires astute business acumen, innovation, and agility. While reports indicate that insurers are investing in development methodologies, flexible infrastructure, modern applications, and operational excellence to improve business dexterity, the urgency to up the ante and reinvent strategies, products, and services cannot be overstated.

Matching Market Expectations

In an uncertain economic environment—where streamlining processes and cutting costs are prerequisites to ensuring profitability—there is increased pressure to improve underwriting ratios. Organic growth continues to be a challenge, given the economic situation and the competitive landscape. Successful players are repositioning and reinventing their products, strategies, and services and taking significant steps to position themselves for growth and profitability in this competitive, low-margin market.

As organizations struggle to keep pace with the disruptive changes in regulation and ensure continuous innovation using scant resources and shrinking budgets, many insurers are looking at leveraging technology to differentiate themselves and create a competitive edge. Insurance companies are developing and deploying platforms that make it easy to adapt to changes—whether triggered by regulations or changing market dynamics. A flexible, modern architecture ensures swifter time-to-market for new products and makes changes to existing products quickly.

Shifting demographics and increased usage of mobile devices are transforming long-standing distribution models. The buying behaviors, attitudes, and preferences of customers are evolving and carriers need to adapt to these changes and find ways to attract and retain these customers. Customers expect the ability to process quotes faster, competitive pricing, diversified billing and payment options, and real-time self-service capabilities.

Insurance providers recognize the need to leverage data, gain meaningful insights, and create predictive models that accurately assess risk and provide the best pricing structure. Carriers need to identify new avenues for value creation while continuing to meet emerging regulatory changes such as Solvency II and International Financial Reporting Standards (IFRS). Additionally, insurers are also under pressure to reduce costs while continuing to grow their customer base and keeping up with changes in regulations without increasing head count.

This paper highlights how you can reinvent and reposition your organization by taking significant steps toward agility and new avenues for value creation while continuing to meet emerging regulatory and governance compliance.

Enhancing Agility: Benefits to PAS and CAS

Carriers are pursuing business dexterity to react quickly to the changes in bespoke business environments. One of the biggest challenges carriers face in enhancing efficiency and agility is their dependence on archaic and inflexible legacy systems. Adding new products or making changes to existing products can be a challenge when operating on these rigid legacy systems.

Meeting consumer expectations by providing more self-service capabilities online can be a challenge as well. Many carriers are in the process of transforming and modernizing their architecture in an effort to be more agile. Well-architected, modern, distributed systems provide the platform for carriers to keep up with the changing business landscape.

Policy Administration Systems (PAS)

Many carriers have several disparate PAS systems, either built in-house or as vendor-based legacy solutions. Carriers are looking at consolidating these different PAS systems on one distributed platform.

Consolidation: In the interest of time-to-market, most carriers are looking at distributed vendor solutions over building their own systems. This implies that carriers need to be open to changing their business processes, bringing in operational expenses, and adhering to adept, out-of-the-box process flows. It is vital that carriers do not over customize vendor solutions, as this will hamper agility—making future upgrades more complex.

Automation: These PAS solutions allow underwriters to automate manual and paper-based processes through the use of sophisticated workflows. They also allow for real-time quotes and instant conversion of quotes to policies. It is also an excellent opportunity for carriers to implement straight through processing with minimal underwriting referrals for simple lines of business—for example, personal automobile LOBs. PAS also provides tools for better communication and tracking with the use of activities/diaries.

Implement Predictive Modeling: Carriers are also looking to implement predictive models that deliver an accurate assessment of risk over traditional rating algorithms. These predictive models are created by sophisticated data analytics that scrutinize the carrier’s book of business. These predictive models are then implemented using modern rule engines and come up with a tier that represents the risk posed by the customer. This determines the pricing structure in conjunction with modernized rating algorithms.

Automated Rating Models: Insurers are now offering innovative usage-based insurance product offerings. Technologies like Geographical Information System (GIS), analytics, big data, and telematics are used to provide a different set of products that follow rating models that leverage real-time customer behavior and usage patterns, and differ from traditional rating processes—for example those that heavily weigh claims history, violation history.

Claims Administration Systems (CAS)

Insurance providers are relooking very closely at their claims processes for two key reasons:

  • Ensuring that the best possible customer service is offered by providing a fair and transparent claim handling experience
  • Creating an efficient claims process that reduces the time and expense to service a claim. For most insurance providers, claims tend to be an area that is very manual and paper-based

Deploy Modern Distributed Architecture: Carriers are focused on implementing Claims Administration Systems that are based on modern distributed architecture. These systems have in-built workflow commands that allow carriers to eliminate manual, paper-based processes. Digitalization with the use of modern document management systems allows carriers to archive these claims files and provide a much better mechanism for disaster recovery than the traditional paper-based approach. It also provides claim adjusters with the mechanism to view prior claim documents and images easily during the claim handling process. In one instance, a claims adjuster for a particular carrier noticed that the roof damage photos submitted for the claim were the same as the ones the insured had submitted the previous year.

Fraud Prevention: Technology can be used to prevent fraudulent claims and at the same time offer better service to customers by processing genuine claims quickly and transparently. Customers can also view the current status of their claims online through the carrier’s portal or mobile claims app. A system can also be designed to send notifications to customers alerting them about changes during the claims process

Streamlined Processes: The First Notice of Loss (FNOL) process and claims allocation process can be streamlined with the application of technology. This is evident from the case study of a particular carrier who was following a round robin process of randomly allocating claims to claim adjusters within an area. This resulted in certain claims adjusters driving past certain claimant addresses on their way while working on claims that were randomly assigned to them. Usage of GIS information allowed this carrier to intelligently allocate claims taking into account the claim adjuster’s current location

Mobile Solutions: Usage of mobile claims apps that allow claims adjusters to capture all the information including photographs using one single device (for example, a tablet), can bring operational efficiency and eliminate the need for them to take physical notes that must be manually keyed into the computer once they are back at the office. Carriers are looking to use these flexible claims systems to enable their claim adjusters to focus on higher value claim management activities with the automation of low-level tasks. This will help achieve quantifiable cost improvements through consistent application of best practices reinforced via performance improvement support capabilities

Billing Solutions: Carriers are looking to modernize their billing solution with the intention of providing customers more options, letting them choose their payment schedule as well as how they receive and pay their bills. These new billing solutions provide various forms of billing and payment options. These systems automate sophisticated billing processes with flexible workflow and business rule-driven control. These modern billing solutions help identify uncollected earned premiums to reduce billing leakage, combine invoices to reduce costs, and leverage equity-based billing to avoid unpaid coverage. They also provide customers with a “green” option of paperless delivery that results in huge cost-savings for the carrier.

Reaping the Benefits of Enhanced Agility

For most insurance providers, the transformation to a more agile and efficient enterprise will be a multi-phase initiative, with each phase taking between 9 to 18 months. While carriers go through the complex transformations illustrated above, it is vital they leverage Enterprise Architecture best practices and create a future state IT roadmap that aligns with their business goals and priorities. Defining the architecture that depicts how the integration between different systems will be accomplished and also addresses security and physical infrastructure upfront, will reduce the risk of delivery. It will also ensure that the systems will be flexible and agile to meet the ever-changing needs of the business.

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