Insurance: vast potential

The US insurance industry is confronting significant demographic, macroeconomic and regulatory challenges to business models and operations. Organic growth continues to be a challenge, given the economic situation and the competitive landscape. Successful players are repositioning and reinventing their products, strategies and services. They are also taking significant steps to position themselves for growth and profitability in this competitive, lower-margin market.

EY helps insurance executives identify and analyze the market forces that should be at top of mind.

Stay nimble amid risk and regulation

Waves of legislation continue to pressure management and absorb precious resources. Combined with the need to innovate in a highly competitive environment, this is causing some insurers to withdraw from long-standing core markets and product lines.

However, insurers are adapting by leveraging technology and developing operating models that are compliant with changing regulatory regimes. New business architectures will enable insurers to release better products more quickly and cost effectively.

Gain market insight

The balance of power is shifting toward the customer, and distribution models are rapidly evolving. Shifting demographics and digital disruption are transforming long-standing retail distribution models.

Success will be achieved with patience, long-term investment and genuine understanding of local dynamics.


  • Underwriting and pricing effectiveness

    Given unrelenting economic uncertainty and prolonged low interest rates, insurers face significant profit- and growth-related pressures and thus must improve the efficiency and effectiveness of their underwriting capabilities.

    One way to improve risk selection and pricing is leveraging data to embrace more sophisticated segmentation. However, success will ultimately depend on adopting enhanced analytical and modeling techniques.

    We can help you optimize the following:

    • Assessment

      Insurers must improve their underwriting and pricing operations to create consistency in their processes, while enhancing insight-driven decision-making, team collaboration, cross-sell/up-sell growth and account management. We review your organization’s current underwriting and pricing performance, measure it against industry standards to determine where to make investments and provide technology solutions to fill operational gaps.

    • Business and solution architecture

      We offer program management, functional and technical design, integration, configuration and testing and deployment. We also assist in the technology selection process, helping you narrow the wide spectrum of underwriting automation components and applications.

    • Underwriting workstation solution implementation

      We assist you with the full spectrum of implementation services for underwriting solutions, including rules engine point solutions (typically selected by personal and small commercial line insurers) and robust underwriting stations (typically selected by middle market, specialty and large/multi-national insurers).

      Unlike policy administration and billing systems, underwriting solutions can involve customization and extensive integration. We support the full implementation cycle, from requirements scoping to vendor software selection to deployment. We also provide important change management services to help you establish new roles and responsibilities in the new underwriting environment.

     

  • Policy administration and billing transformation

    Insurers are under constant pressure to reduce underwriting operations costs, while continuing to grow their customer base without increasing headcount. They also face tougher demands from producers and customers who want faster quoting, more accurate policy issuance, diversified billing and payment options and real-time self-service capabilities.

    We can help you optimize the following:

    • Assessment

      We perform a detailed assessment of the current state of operational efficiency using our proven cost-related tools across rating, quoting, issuance and billing activities. This assessment can include an evaluation and quantification of the total cost of ownership for legacy policy and billing systems.

    • Business and solution architecture

      We develop a business architecture and implementation roadmap that sequences deployment of functionality by product line, geography, channel and transaction type. Our business case frameworks can accelerate measurement of business and technology cost reductions as aligned to the roadmap.

    • Policy administration and billing solution implementation

      We provide a full range of implementation services including solution selection, requirements, design, configuration, integration and deployment. We also assist with the change management aspects of these programs, helping establish new processes and controls to improve regulatory and internal audit compliance.

      Working with leading policy and billing solution providers, we present you with objective insights to navigate the complex vendor landscape. Our extensive delivery experience with vendors helps with software selection and guides you through project delivery to achieve cost reductions and process improvements.

     

  • Product development and delivery

    Incompatible systems, organizational silos and disjointed processes perpetuate costly and low- quality product development approaches. As a result, many insurers have redundant product portfolios that complicate underwriting, operations and claims processes.

    As insurers look to refresh and expand their products, these issues restrict their ability to react to market changes and satisfy their customers.

    Product design and delivery architecture are central to innovation and fulfilment across the insurance enterprise, and they must be integrated into both business processes and technology solutions.

    We can help your organization take the following steps to develop a robust suite of products designed for specific customer needs:

    • Assessment

      We review your current product development, processes, systems data, interfaces and delivery capabilities to increase speed to market. We offer tools to evaluate your products, learn if there are ways to simplify them and help reduce costs.

    • Business and solution architecture development

      We help you properly align organizational needs and technical priorities for product development. We ensure assessment and future state definition can be delivered using best market practices. By applying our proprietary tools, maturity models, product design know-how and business case frameworks, we assist with architecture assessment and help insurers deliver future solutions that are in line with best market practices.

    • Product development workstation

      We align and integrate product development workstation capabilities with other underwriting and policy administration systems. This includes developing a target solution architecture, as well as selection, design, configuration, integration and deployment of an effective workstation.

     

  • Claims transformation

    Our offerings enable transformational or step changes in claims capabilities. Our expertise and analytical insight can help you achieve better claims outcomes and expense management.

    Our team can help insurers in the following ways:

    • Claims performance analysis

      An independent review can help your organization identify areas of claims inefficiencies and processes that can lead to failed implementation or claims overpayments.

    • Claims analytics and predictive modelling

      Predictive modelling techniques are crucial to improving your claims operations. Our teams have a deep understanding of these techniques and can use the resulting analytics to assist organizations in several ways:

      • - Identifying drivers of unexpected claims development
      • - Providing data guidance
      • - Implementing models
      • - Prioritizing processes via loss mitigation strategies

      When combined with data from our claims leakage analysis teams, these analytics can be incorporated into a program that reduces overall claims costs and expenses and enhances underwriting practices.

    • Claims capability maturity assessment

      This assessment benchmarks your current business claims processes and capabilities against industry-leading practices. By knowing where your organization stands, you are one step closer to a strategic business and technology program.

    • Claims target operating model and organizational design

      We help organizations redesign their claims organizations, processes, governance and technology to align to business and operational strategies. We serve you by focusing on performance, process excellence, skill specialization, shared services, sourcing and continuous improvement.

    • Claims transformation business case development

      Our deep industry knowledge helps us prioritize claims initiatives that will provide the best return on an insurer’s investment.

    • Claims technology enablement

      Our full-service claims system selection, design and implementation capabilities leverage onshore- and offshore-based functional and technical claims professionals. They provide extensive delivery experience in project management, business analysis, process design, business and systems architecture, product configuration, systems integration, conversion and testing.

    • Claims change management

      We offer a compelling vision so you can drive change, improve stakeholder engagement and communications and boost operational readiness. We also help you support training and align human resource processes (such as career paths and performance management) to encourage desired behavior and sustain results.

    • Claims customer experience strategy

      A review of the claims customer experience can result in a differentiating, multi-channel design that aligns with an insurer’s corporate customer strategy. By bringing industry insights and experience to the process, we provide guidance in developing a customer experience roadmap that is tailored to claims strategic initiatives and practical to implement.

     

  • Are you ready for Solvency II?

    At the recent Trilogue meeting, the European Commission proposed a deferral of the implementation date of Solvency II to January 1, 2015, but the proposal did not reach consensus.

     

    Are you ready?

     

  • Actuarial and risk management strategies

    As the insurance market undergoes radical change, insurance companies face a difficult balancing act. They must identify and assess new options for value creation while continuing to manage risks and meet emerging regulatory requirements such as Solvency II and IFRS.

    See where our more than 1000 actuarial and insurance risk professionals serve clients around the world. The combination of our dedicated actuarial and risk professionals and close partnerships with related practices across EY provides truly integrated services across all disciplines in the insurance industry.

    Our deep global knowledge comes from our work with insurance companies, banks, pension funds, private equity firms, sovereign funds and local regulators.

    EY - Actuarial and risk management expertise

    Click the magnifying glass to learn more about our actuarial and risk management expertise, and how we use this to enhance financial performance and the effectiveness of actuarial and risk management functions.

    Leverage that knowledge by contacting our actuarial insurance team leaders in EMEIA, the Americas, Asia-Pacific or Japan.

    Learn how our actuarial services drive transformation, financial reporting, risk and financial management and value generation.

    • Risk and capital

      As capital becomes scarce and competition from other financial institutions increases, insurers are evolving from static to dynamic optimization of risk portfolios. We help companies optimize their risk portfolios under current rules as well as expected new regulations such as Solvency II.

    • Customers and growth

      The insurance industry faces many challenges: political changes, economics, product innovation, technology advances, competition from other financial sectors and changing customer behavior. We prepare companies for these changes by providing practical insights on consumer buying patterns. We also help you understand which customers truly create value so you can build strategies to enhance these high-value relationships.

    • Financial reporting

      The global insurance industry is facing a wave of new regulations and reporting requirements. It is crucial for companies to understand the micro and macro effects of new reporting requirements—the importance of reported figures and the wider implications for strategy and operations. We help companies understand and prepare efficient external and internal reporting frameworks by providing actuarial services that are part of integrated multi-disciplinary solutions.

    • Actuarial transformation and offshoring

      To improve cost-effectiveness, insurance companies have a broad range of options: integrated finance solutions, actuarial and risk reporting processes, selective offshoring and shared service centers for improving standardization and output quality. We help companies simplify their actuarial infrastructure and achieve cost efficiency by streamlining or offshoring/outsourcing their actuarial and finance reporting processes. 

    • Modelling

      Actuarial and risk models are becoming increasingly crucial to business operations. Although a fast close of actuarial reporting remains important, regulatory focus and requirements to put a robust control environment around models are also increasing. We help companies make their actuarial and risk models efficient and fit for purpose.

    • Audit and assurance

      With long experience as auditors and more broadly on assurance engagements, our multi-disciplinary actuarial teams give comfort to Boards on key strategic items including managing supplementary financial information and meeting regulatory requirements.

    • Asset management

      Asset management is closely linked with capital optimization, product optimization and financial modeling. Facing innovation and competition from other financial sectors, insurers must develop optimal asset management strategies. We help companies with asset liability management, derivative pricing and performance management.

    • Mergers and acquisitions

      As companies revisit and optimize their portfolios, they look to acquire and consolidate more attractive businesses, and dispose of businesses in markets where they cannot compete. With depressed valuations in many insurance markets and the shifting strategies of multinationals, the mergers and acquisitions market is poised to become more active. Our experienced Transaction Advisory team provides integrated services to help companies with valuations and post-merger integration.



    Related content

     

    To improve cost-effectiveness, insurance companies have a broad range of options: integrated finance solutions, actuarial and risk reporting processes, selective offshoring and shared service centers for improving standardization and output quality. We help companies simplify their actuarial infrastructure and achieve cost efficiency by streamlining or offshoring/outsourcing their actuarial and finance reporting processes.
    Actuarial and risk models are becoming increasingly crucial to business operations. Although a fast close of actuarial reporting remains important, regulatory focus and requirements to put a robust control environment around models are also increasing. We help companies make their actuarial and risk models efficient and fit for purpose.
    The global insurance industry is facing a wave of new regulations and reporting requirements. It is crucial for companies to understand the micro and macro effects of new reporting requirements—the importance of reported figures and the wider implications for strategy and operations. We help companies understand and prepare efficient external and internal reporting frameworks by providing actuarial services that are part of integrated multi-disciplinary solutions.
    With long experience as auditors and more broadly on assurance engagements, our multi-disciplinary actuarial teams give comfort to Boards on key strategic items including managing supplementary financial information and meeting regulatory requirements.
    The insurance industry faces many challenges: political changes, economics, product innovation, technology advances, competition from other financial sectors and changing customer behavior. We prepare companies for these changes by providing practical insights on consumer buying patterns. We also help you understand which customers truly create value so you can build strategies to enhance these high-value relationships.
    As companies revisit and optimize their portfolios, they look to acquire and consolidate more attractive businesses, and dispose of businesses in markets where they cannot compete. With depressed valuations in many insurance markets and the shifting strategies of multinationals, the mergers and acquisitions market is poised to become more active. Our experienced Transaction Advisory team provides integrated services to help companies with valuations and post-merger integration.
    As capital becomes scarce and competition from other financial institutions increases, insurers are evolving from static to dynamic optimization of risk portfolios. We help companies optimize their risk portfolios under current rules as well as expected new regulations such as Solvency II.
    Asset management is closely linked with capital optimization, product optimization and financial modeling. Facing innovation and competition from other financial sectors, insurers must develop optimal asset management strategies. We help companies with asset liability management, derivative pricing and performance management.

     

  • Be prepared for IFRS/accounting changes

    We are increasingly living in a global economy — with trade and inbound and outbound investment a fact of life. It's no wonder capital markets have long advocated for globally recognized accounting standards.

    Until recently, that common accounting language has been a missing link. Now, policymakers, lawmakers and regulators are working alongside standard-setters to provide a single set of high-quality, global accounting principles.

    Benefit from our timely insights as your prepare for this transition.

    Related content

    EY - Insurance accounting alert

    Insurance accounting alert

    The International Accounting Standards Board (IASB) and Financial Accounting Standards Board discuss Exposure Draft comment letter responses; IASB discusses link between insurance contracts project and IFRS 9.

  • Customer agenda

    The buying behaviors, attitudes and preferences of insurance customers worldwide are changing. To understand this transformation, insurers need to determine how they must adapt to attract, deepen and preserve customer relationships.


  • Governance facing the industry today

    We, along with Tapestry Network, established the Insurance Governance Leadership Network (IGLN), a global network centered around non-executive directors from a select group of the largest insurers from Europe, North America and Asia. The IGLN provides a peer-to-peer platform for participants to discuss critical issues facing the industry globally. Its primary focus is the non-executive director, but it also engages senior management (notably chief risk officers) and regulators, all of whom are committed to outstanding governance and supervision in support of the mission to build strong, enduring, and trustworthy insurance institutions.

    Tapestry Briefings – A View from the Boardroom:

  • The emergence of emerging markets

    The global economy is at a turning point. Fast-growth economies in Asia, the Middle East, Africa, Latin America and Eastern Europe now form almost half of global GDP and, in 2010, they contributed 70% to overall global growth.

    These trends are accelerating. By 2050, fast-growth economies are projected to account for 65% of the global economy. In contrast, most developed markets are still struggling to recover after the global recession.

    For many businesses, their very survival depends on pursuing a growth agenda. This might include expanding into new markets and sectors, finding new ways to innovate or taking new approaches to talent.

    But there’s one key question that must be answered: how can your insurance business make the most of the many opportunities that exist?
     

    Related content



Connect with us

Stay connected with us through social media, email alerts or webcasts. Or download our EY Insights app for mobile devices.

Twitter chat: Learn what banks must do to succeed in the world's most volatile markets

EY - Twitter chat

Join EY's Jan Bellens and Steven Lewis on Tuesday, 23 September 2014 at 3 p.m. G.M.T., 10 a.m. U.S. E.D.T. and 10 p.m. Singapore time to talk about banking in emerging markets.


 

Managing change

EY - David Hollander

David Hollander, Global Insurance Advisory Leader, discusses the key challenges facing insurers.