What are the benefits of insurance modernization?
Why Modernize Holistically?
Why Modernize Now?
- Improved analysis
- Enhanced stakeholder communications
- Efficiency gains
- Resource efficiency
- Competitive advantage
- Better management information
- Efficiency gains, including process consolidation and streamlining and strengthened internal linkages and reduction of internal silos
- Economies of scale
- Metric reconciliation and consistency
- Internal consistency of metrics and reporting
- Meet regulatory requirements
- Early adapter access to optimal resource pool
- First mover advantage
- – Regulatory preparedness
- – Influencing
- – Perception
- – Decisions (products/M&A)
- – Embedding value
- Maximize program flexibility
- Make processes strategic rather than just reactive
- Linkage to current strategic initiatives
While meeting the demands of current business pressures and regulatory demands under a single modernization initiative will entail considerable expenditure, the benefits to approaching operational change holistically will promote better business practices greater innovation, and provide a competitive advantage. Notably, those who do so will benefit from enhanced data analytics, better underwriting and management decisions more efficient capital usage , and more attractive products.
Moreover, a fundamental benefit of modernizing holistically is that doing so will also provide significant savings by not “ripping up the road more than once.” Rather than treating each regulatory development and business imperative as one-offs, holistic modernization can provide greater organizational efficiency, speed, scalability and leverage. Particular benefits include:
- Future-proof metrics – redesigned processes and systems will produce metrics to satisfy current and future requirements being proposed around the IFRS/FASB Insurance Contracts projects, Principle-based Reserving for life insurers, the communication of ORSA requirements (i.e., assessment of risk, stress testing and projected capital, and CAT modeling output), updates and enhancements to internal metrics (i.e., economic capital and embedded values), and expanded disclosures.
- Improved analysis – Improved automation and enhanced tools will allow employees to focus on high-value added analysis.
- Process efficiency – Automated feeds and processes mean reduced process times, less manual intervention, and reduced dependencies on any one individual.
- More efficient and less costly infrastructure – Reconciled processes, efficient deployment of resources, and consolidation of systems will streamline infrastructure and drive down costs.
- Optimized use of resources – For example, actuaries will be able to spend more time on value-added analysis and IT resources.
- Enhanced controls – Increased confidence in results, automated controls, and greater responsiveness in a changing regulatory environment.
- Improved governance – Clearer and more efficient processes mean less complex governance.
- Greater transparency – Greater understanding and consistency of results produced and fewer “surprises” in financial results. Improved stakeholder communications – Better data quality, a “single source of the truth,” and comparable performance metrics will enable all stakeholders to speak the same “language.”
- Timely and Relevant Management Information – Facilitates strategic and operational planning and decision-making.