Articles - Gaining a competitive edge by modernising policy development

Policy drafting is a fine art, and in many ways the UK insurance sector leads the world in terms of quality and clarity of consumer-facing wordings from a legal perspective, but there is always room for improvement. From global insurers to start-up insurtechs, as insurance businesses large and small grow and evolve they have grappled with oversight of policy development across individual lines of business, classes of business and territories.

 By Shreyas Vasanthkumar, Managing Director, EMEA, Duck Creek Technologies

 The issue is complicated by the myriad of changing legal, compliance and anti-fraud measures that require updating across policies, and updates to wordings affecting the breadth of coverage on offer that must be consistent across a class or multiple classes of business, and across territories.

 In addition, insurance buying habits are also rapidly changing - a recent global survey of consumer purchasing habits conducted by Research in Finance revealed that 45% of insurance buyers would prefer to make any changes to their policy online or through an app (1) .

 Insurers have sometimes struggled to find the agility needed to offer a true multi-channel, multi-platform service to insurance buyers. Internally, they have traditionally generated policies in a number of different ways, but too often those systems that generate policies for different geographies and classes of business are not unified across the business.

 This often results in duplicative effort, inconsistencies and inefficiencies, and increases the risk of errors creeping in - for instance if changes to standard wordings in one area have to be manually repeated across different business lines.

 The benefits of getting it right at a central level are clear: wordings that are up-to-date and consistent, and are more simple to enforce in instances of claims, when they come under intense scrutiny, and easier to sell, while also less likely to lead to regulatory issues or legal disputes.

 And from a customer-facing perspective, the benefits of quicker, more relevant user experience and faster rollout of innovative new products are also transparent.

 However, too many insurers have been left nervous of deploying new systems for critical functions such as policy development that have not been tried and tested. Quite simply, the independently verified and endorsed technology to achieve this kind of breakthrough has been lacking until recently, and confidence among multinational insurers in their ability to digitally transform has been low.

 But there is a step change underway, and many insurers are increasingly recognising that centralised policy management systems are capable of streamlining and managing this data transfer much more efficiently and reliably.

 A huge amount of time and effort has gone into developing and continuously refining the cutting edge policy systems that are now available, and independent endorsements of the technology are now streaming in. Market analysts such as Celent have consistently highlighted the benefits of the cloud-based software as a service (SaaS) approach for P&C insurers looking to evaluate their next technology investment, for instance - providing the much needed confidence that insurers are looking for.

 Many insurers have spent the last couple of decades trying to automate systems and processes - often using outdated technology that is simply not flexible - and are realising that their needs are increasingly focused on agility, scalability and adaptability. There is now an abundance of opportunity for the application of low-code solutions and cloud technologies where the adoption of modern SaaS platforms can be the difference between those companies that are truly differentiated and relevant for their customers, and those that get left trailing in the wake.

 It is important that, when defining their core systems requirements with potential vendors and implementation partners, insurers carefully evaluate the global usability of the technology they are looking to deploy, with user experience front-and-centre and ideally created persona-based templates that allow the experience to be tailored by role within the business, and easily rolled out.

 Increasingly the evidence points to more consistent underwriting outcomes too, thanks to the openness of cloud-based platforms, which empower insurers to integrate data and predictive analytics like fraud detection, property or vehicle imports, or cyber risks that improve risk selection and pricing, into policy development.

 In addition, single product definition toolsets allow insurers to quickly add or revise products by using a single point of change for rating, rule, form, and page modifications. Workflows can also be streamlined by capturing only the data that is needed to provide customers with indicative pricing in minutes.

 Modern core systems that deploy central policy management are also allowing insurers to easily tap the insurtech ecosystem and integrate cutting edge anti-fraud technology into policy administration systems. Having these advanced processes in place at policy inception is helping cut down the risk of fraud at the claims end of the insurance lifecycle.

 Insurers have also found that modernising their policy systems using core systems also supports their multi-channel approach in different markets - enabling agents, brokers, and any other third-party entities to easily interact with the technology.

 But configuration is critical - the best centralised policy configuration tools should also allow an insurer to become fully self-sufficient and permit moving many tasks from developers to business analysts or business users.
 In an era of rapid, customer-centric innovation and growth, it is absolutely crucial for insurers to have a firm handle on their full policy lifecycle process, including an integrated development environment for insurance products.

 Improving operational efficiency and customer experience at the same time is at the core of any new technology initiative at any business. Consumers share a lot of personal information with their insurers at the point of policy inception, and each data point they give their insurer must be maximised across the lifecycle, avoiding duplicative or irrelevant questions.

 Ultimately, we are seeing a strong recognition in the UK and EMEA markets and beyond from insurers of all sizes that harnessing the innovative policy technology available can deliver the oversight, reliability, speed-to-market and, crucially, the competitive edge that they are seeking.



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