Five ways the right technology empowers multinational insurers
A great platform enables insurance carriers and their partners to adapt products for multiple countries.
Businesses that operate across international borders in multiple countries typically face a myriad of challenges. But because of product, distribution and regulatory complexity, multinational insurance companies face an even more difficult operating environment.
U.S. insurers that sell products only domestically already deal with formidable issues like achieving operational efficiency, harnessing the power of data for competitive advantage and meeting expectations of increasingly demanding customers — if their systems even allow them to gain a unified understanding of each of their current and former policyholders. They also manage differences between state requirements. But their problems are compounded if and when they expand to different nations.
There are several dimensions of regional differences including how products are defined in varying countries, differences in how products are sold and distributed, slight or substantial product variations and a host of disparate regulatory requirements.
Here are five areas that prove to be challenging to multinational insurers.
- Language barriers. Let’s start with an obvious but major challenge for any carrier operating in different geographies: different languages. Changing the language changes the product in basic ways such as how it is presented, described and documented. As soon as an insurer begins to operate in another country, the organization needs to produce materials and communicate with consumers in culturally familiar ways regardless of the channel, whether it’s a call center, online or via mobile device. Of course, terminology differs from one language to another, and simply translating text into another language may not be effective. The way you would describe a policy in one country might not convey the intended meaning in another, for instance.
- Varied product definitions. Insurance fulfills a need in the marketplace and that need varies depending on the demographic makeup of a particular country, who’s buying coverage and how they’re buying their policies. Some European countries, for instance, have a large gig economy or have embraced on-demand insurance, while others may follow a more traditional, heavily-regulated and very standard definition of what an insurance product is. Carriers might define a motor product one way in the U.K., but it might be very different in Spain or Portugal, for instance, even though we may think of the products being the same.
- Differences in sales and distribution. The way in which products are sold and distributed can vary considerably from one country to the next. Selling an insurance product can be very different if you’re selling direct — over the Web or via an app — or selling in an aggregator market. In the U.K., for instance, nearly all of the personal lines business is sold through an aggregator, which affects how carriers must package, present and differentiate a product. The mix of channels — direct, broker, agent or third-party intermediary such as banks and retailers — and their role in the value chain differs.
- Regulatory mandates. Regulatory environments vary significantly between countries, and some governments may mandate specific coverage while others do not. Governments also define insurance products, pricing, claims processing and mandatory or required versus optional coverages. Insurance administration can also vary between countries. Some countries require a 12-hour or six-hour acknowledgement of a claim event or first notice and payment within 36 hours, if not contested, for instance, while other countries might not have the same requirements.
- Differences in regulatory reporting requirements. Regulatory reporting requirements also vary considerably. When operating in different geographies, carriers have to be on top of what, when and where they have to report, how often and at what level of detail. And access to data from core platforms is critical to meeting these requirements.
Of course, there are plenty of technology ramifications and requirements for operating across geographies. But the right technology platform can help insurance organizations successfully cope with the various differences.
Putting tech to work
Multinational insurers can overcome different product requirements across jurisdictions by moving from complex and constraining processes to platforms that enable a more modular approach. This allows carriers to not only more easily adapt their product definitions, sales strategies and meet local regulations, but also better meet customer needs for coverage across geographies and drive efficiencies.
Unfortunately, many insurance platforms are defined around lines of business, so everything from the workflow to the screens to the data model to the rules were all built around the lines of business. If an insurer is using a system built around motor in the U.K. and wanted to offer the same in France, it would almost have to replicate all parts of its policy system to accommodate regional differences, because they weren’t created as services or delivered as different modules.
Also, closed platforms that are written around lines of business can’t provide customized, customer-centered offerings, a key to meeting universal customer demands for personalized products. Multinational insurers need platforms that can be easily changed up for different geographies so they can operate competitively in disparate environments.
Modularity is key
A modern-cloud-based, customer centric IT architecture can boost agility and create modularity. An API-first architecture — software design that enables applications to easily interface with one another — can help carriers roll out new offerings in weeks instead of months and reduce legacy system dependence. This way organizations can rapidly develop a new business process without needing to significantly rewrite their product and application, for instance.
EIS is able to support this “one product for many countries” approach because its platform enables insurers to deconstruct a product — separating the definition of the product, such as the rules and workflow and different underwriting guidelines, from the core administration capabilities.
With a product-centric platform, upgrades are complex because insurers have likely customized parts of the system so even in a single-country model, upgrades can be cumbersome due to the complex environment, including upstream and downstream integrations. Since EIS has separated the carrier rules and products from the core system, carriers can use the EIS continuous integration/continuous delivery model and do full regression and time shifting, for instance, for the whole platform very quickly. Carriers have to make sure they have separated the business logic for the customer or the product from the core system capabilities. This reduces the potential risk and minimizes the time to do upgrades.
In summary, the new generation of modular product platforms helps multinationals reuse technology investments from one country to another in a manner that has eluded them in the past. It presages a quicker path to growth.
Brad Worth is senior vice president of Channels and Product Solutions at EIS.
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