The latest report from Ovum, Core Operations Modernization in the Global Insurance Industry, based on interviews with more than 500 senior decision-makers, examines the current state of core operations modernization within the global insurance industry. It assesses today's core operations environment and highlights the key objectives, barriers, and strategies for modernization in the industry.
Overcoming a poor customer experience is the primary objective of core operations modernization
Given the commoditized nature of many insurance products and the growing competitive threat, a key strategy for many insurers is to retain and grow revenues from their existing customer base, for which a critical element is the delivery of a strong overall customer experience. The latest research from Ovum reveals that improving the overall customer experience is emerging as the key driver for many core operation modernization initiatives. This marks a significant shift away from the cost-reduction and regulatory compliance focus that has characterized modernization projects since the global financial crisis.
This emphasis on the customer experience as a goal of core operations modernization is particularly strong in Europe and Central and Latin America, where the continuing weakness of many markets and the more recent slowing in the Brazilian and Mexican economies are driving a clear focus on customer retention.
The goals of core operations modernization reflect the needs of specific regional markets, however. Among insurers in the Asia-Pacific region, the ability to launch new products and deliver a good customer service rank equally highly as key goals of core modernization. The ability to rapidly introduce new offerings in these growing and dynamic markets is a key operational requirement in this region, but insurers do not see these opportunities as simply a "land grab," and are also attempting to build customer relationships for the future.
The study also revealed a more balanced set of objectives for core operations modernization among North American insurers, showing the need to use a broader set of more nuanced strategies to meet high customer expectations.
Core Operations Modernization in the Global Insurance Industry, IT0004-000430 (October 2015)
Charles Juniper, Principal Insurance Analyst, Financial Service Technology