Improving target operating models should be at top of agenda for insurers
by Danny Maleary
In the battle to improve growth options, operational efficiencies and ultimately profitability, improving target operating models should be at top of the agenda for insurers.
Insurers across all business classes are reviewing their operating models to meet the challenges of a highly competitive market, which is fuelled by low interest rates, that attract increased investment which is in turn driving rates down.
When faced with the challenges associated with growing revenue in a soft market, maximising operational efficiencies from the existing business model is at the forefront of insurers’ minds.
These factors are, in part, increasing insurer interest in exploring innovative target operating models (TOMs) that embrace such solutions as centralised managed services of ‘non-competitive’ functions. These incorporate forward thinking, IT enhancing, and robotic technologies as a more effective way to create growth in the business – particularly as this approach can reduce costs when compared to those associated with acquiring new business.
Mergers and acquisitions (M&A) activity is increasingly a factor in some business transformation projects and is leading to best practice being refined and concentrated into larger groups, forcing other players to further improve their business efficiency through innovation.
And, of course in the London market, as the recent ‘London Matters’ report produced by the London Market Group (LMG) highlighted, the market needs to address some fundamental questions about how it can effectively compete in a rapidly globalising insurance market, given its expensive cost base. Lloyd’s director of operations, Shirine Khoury-Haq recently spoke about her commitment to market centralisation based around non-competitive operational functions as part of a market shared service model.
To address these now urgent demands innovation needs to be placed not only at the front end of distribution and underwriting but also in the middle and backend of the insurance process too. I believe this is where experienced and well resourced service providers can play a significant role in driving, testing and investing in centralisation and innovative solutions to support brokers and insurers alike.
Better customer care is the key
However, innovation, and particularly increased use of technology will be for nothing, if the focus does not remain on customer retention. In reality this means improved service and product choice. These can be better delivered through strong and efficient systems aligned with motivated and highly skilled professionals, trained to offer customers the higher standards and feedback that they are seeking.
I believe a high quality service provider such as Capita has much to offer insurers, working in partnership to deliver added value innovative solutions and by embracing the needs of the customer throughout the life of the relationship.
Taken to its ultimate point, technology, high service standards driven by a customer centric focus can lead to the development of sophisticated and efficient centralised or shared service solutions for the industry, particularly the London market.
Client success stories
Here's a selection of clients we've worked with and the benefits they've gained. Find out how you too can benefit by reading their stories.Read more