Study of Industry Executives by TowerGroup Examines Business, Technology Initiatives Relative to Life Insurance Underwriting
NEEDHAM, MA, November 1, 2006 – Many US life insurance industry executives believe their respective companies are late adopters in regard to the automation of the life insurance underwriting process, according to a 2006 survey conducted by TowerGroup in partnership with industry publication Insurance Networking News.
The survey, which polled a representative sample of US life insurance industry executives representing the spectrum of life insurance products offered in the marketplace, revealed that growing revenues, improving profitability, and driving operational efficiency head the list of life insurance carriers’ top strategic business initiatives. However, TowerGroup discovered that life insurers feel their ability to meet these goals is constrained by technological inefficiencies – ones that could be ameliorated by IT investments targeted to support product management, operations, and distribution.
“Although TowerGroup finds that the life insurance industry has strong growth potential, based on converging trends in products, demographics, and distribution, insurance carriers are being held back by their inability to get life insurance products to market quickly and to underwrite new business efficiently,” said Cindy Saccocia, research area director of the Insurance research service at TowerGroup. “The survey results demonstrate the importance of investing in technology that can support these key areas.”
Highlights of the survey include:
Life insurers face a common set of business challenges within the underwriting process, relative to product management, operations, and distribution. These challenges run the gamut from making better and faster changes to business rules, to ensuring compliance in a tough regulatory environment, to pushing enhanced products and services through responsive delivery channels. Most survey respondents say they hope to effect improvements to these core business issues within one to three years.
Yet the survey also revealed disconnects between how executives view business and IT strategic initiatives. Though product management is critical to meeting top business objectives, a surprising number of respondents ranked this area as a last priority on the technology front. Findings like these suggest that life insurers must gain further understanding of which IT functional areas fuel core objectives – or inhibit their progress.
Business process management, modernization of legacy platforms, and infrastructure consolidation are all IT strategic initiatives critical to supporting functional areas in the life insurance underwriting process.
Saccocia continued, “Carriers must clarify their understanding of the needs of product management so they can better determine what technologies are required in order to shorten the development and life underwriting cycles. Only by fully appreciating the internal obstacles to achieving optimal underwriting performance and outcomes will carriers be able to overcome them.”
The study polled 3,000 Insurance Networking News subscribers on business and technology readiness in the life insurance segment, garnering a 1.5% response rate representative of the overall industry profile. The survey was fielded to meet two goals: to identify current business and technology capabilities necessary for life insurance companies to maintain or increase their competitive position in the marketplace; and to assess the level of change insurance executives desired or planned over the next five years.
Three related TowerGroup reports on life insurance underwriting by Saccocia are available.
“US Life Insurance Industry Survey Data: Is Technology What’s Holding the Business Back?”
“Life Insurance Underwriting: Applying Lessons Learned by Property and Casualty Insurers”
“The State of US Life Insurance: Product Growth, Buyer Profiles, and Distribution Methods”
Those interested in purchasing a copy of any TowerGroup report or subscribing to a TowerGroup research service may call +1.781.292.5200 or email [email protected]
At TowerGroup, Saccocia’s research covers all aspects of the insurance industry, including: outsourcing, underwriting, retirement, mobile technology and IT spending.
TowerGroup is the leading advisory research and consulting firm focused on the global financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world’s leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America, Europe, and the Asia-Pacific region, TowerGroup serves a global client base. Visit www.towergroup.com for more information.
About Insurance Networking News
Insurance Networking News is a trusted source for information on how technology is being implemented to support insurers’ strategic business objectives, providing insightful analysis of–and case studies on–how technology is being innovatively utilized to automate critical processes. Headquartered in Chicago, Insurance Networking News is a SourceMedia publication. Visit www.insurancenetworkingnews.com for more information.