U.S. insurance execs acknowledge need to modernize core systems

Two-thirds of the approximately 200 insurance executives taking part in a survey earlier this month say they are dealing with aging legacy systems, a situation that SAP AG suggests is a prevailing hindrance to reaching new markets and managing the entire customer life cycle.

Asked about the best practice for managing core systems modernization, the majority of respondents – 54% – indicated to find a trusted partner with an integrated solution platform, SAP AG notes in a statement issued June 17. That percentage was greater than for the two other responses combined, namely 23% for those who would consider preserving as much of the legacy systems as possible, and 23% for those who would prefer replacing the legacy systems with an in-house build.

Carried out June 3 to 4, the survey is based on interviews with 203 insurance executives who attended the Insurance Accounting & Systems Association, Incorporated’s 2013 Annual Conference in Washington, D.C.

Despite generally recognizing the major challenges that must be addressed to effectively tackle core system modernization, SAP AG notes that 38% of respondents indicated their systems are completely outdated, poorly integrated and cannot be modernized incrementally, while 29% reported an inability to bring the IT and business teams together to fully understand the problem and the opportunity.

“As the insurance industry becomes increasingly commoditized, speed and agility serve as a key competitive advantage for insurers as they look to differentiate themselves and capture more market share,” Robert Cummings, global head of SAP AG’s insurance business unit, notes in the statement.

“Collaboration between IT and business teams along with a trusted enterprise partner that can seamlessly upgrade and modernize core systems is crucial to reach new markets and manage the entire customer life cycle,” Cummings contends.

Surveyed insurers pointed to several upgrade considerations they believed would help them gain competitive advantage:

• 43% said advanced analytics to provide greater insight into the business, including predictive and fraud management, are essential for them to differentiate themselves;
• 22% indicated mobile workflows and apps for employees, agents and customers;
• 19% cited delivering a single view of the customer and creating a great customer experience at every touchpoint across the policy, billing and claims cycle.