February 25, 2014

Commercial insurance is complex, requiring a huge amount of flexibility to deal with the "non-standard." Compared to car insurers, say, who handle a relatively narrow range of data capture requirements and policy structures, huge variations exist in P&C insurance with a wide spectrum of contract structures, types of data, required analytics and types of calculations handled. As the operational landscape has widened to a global market in the last decade, the tug-of-war that exists between global and local needs has become more apparent and more urgent to address.

The Case for Flexibility

It's a given that insurers need flexible systems that enable businesses to:

  • readily adapt to change
  • accommodate growth through new lines of business
  • handle mergers and acquisitions
  • process increasing amounts of data
  • expand into other countries.

These flexible systems offer a matrix of possibilities and deliver obvious benefits including responsiveness and scalability.

The downside to such agile and powerful technology, however, is that systems can be fit for purpose globally but fall short of meeting local needs when compared to a locally-grown, hard-wired solution. For example, let's say a carrier with headquarters in the U.S. has a London syndicate, with underwriters based in the Lloyd's building. In this case, the London-based operation requires systems and screen flows that facilitate face-to-face trading with brokers, while the U.S.-based operation requires screens tailored to help remote users answer and respond to customers. The disparity between the two sets of needs results in a poor user experience and a lack of productivity for both parties.

Craig Robinson, Xuber
Craig Robinson, Xuber

The Case for Specificity

So what of local business units working as part of international operations? Yes, they want flexibility, but they also want systems that deliver specificity and relevance. They crave the autonomy to deliver against their local objectives by handling:

  • region-specific data capture and reporting
  • local user interface needs and preferences
  • locally imposed regulatory requirements
  • nuances of local risk subsets
  • region-specific levies and premium taxes.

In an effort to achieve this specificity, local business units typically have to choose between two imperfect solutions. In the first "global" option, internationally implemented systems are mandated and rolled out to local regions. Then, local users have to painstakingly navigate through a generic user interface with multiple screens of irrelevant information. Users are offered a huge universe of data within such systems, and searches and inquiries often yield extraneous answers. In addition, when attempting to tailor a global system to meet local needs, it becomes cumbersome and time-consuming as users try to accommodate a variety of nuances.

[The omnichannel revolution and insurance core systems]

In the second scenario, locally built, hard-wired systems are deployed, offering local users the functionality and interfaces they need. But this comes at a price to the wider organization, including management. Local policy and risk information is virtually inaccessible, and a unified view of global, multi-currency operations is often lacking.

To illustrate the conflicts that may arise, let's say a carrier based in Paris writes a contract for a multi-national customer covering its commercial fleet of vehicles in 10 different countries. Overall performance of the contract is measured by the Risk Manager and the Underwriter in Paris, yet claims are handled and negotiated locally. Claims documentation is re-entered locally, in a local language and currency, making group-level visibility, responsiveness and management of the contract a major challenge.

Time to shake hands

For a long time, there has been an element of compromise regarding the technology insurers choose, and companies have been asked to take sides – to be flexible and agile, or to satisfy local demands. Now, a modern era of configurable technology is offering the true ability to achieve flexibility and specificity in a way that is entirely fit for purpose. Companies that are embracing highly-configurable systems are buying into the ultimate capability to balance the two, and these businesses will shape the future of global insurance:

  • They can effect change quickly without costly hard-coding of their systems
  • They are gaining control and visibility of cross-border, multi-currency operations
  • They are empowering local regions with intelligent tools that intuitively recognize indigenous requirements.

In the words of Benjamin Franklin, "There was never a good war, or a bad peace." And while many sectors are already embracing the transparency of a global marketplace, it seems the time is right for insurers to finally declare a truce between flexibility and specificity and truly unify their operations.

About the author: Craig Robinson is head of business development, North America at Xuber. He has also worked at StoneRiver, Sherwood International/Sunguard and ReCapital, General and National Reinsurance companies and has more than 30 years’ experience in the reinsurance software market. He joined Xuber in August 2013 with responsibility for pre-sales, partner relationships and support for product development.