Life insurance companies with legacy policy administration systems are unable to truly leverage the benefits of economies of scale that new software systems provide. A fragmented legacy IT landscape is often a root for driving high IT costs as well as increasing operational costs.
Administration costs are one of the largest expenses for life insurance companies. We wanted to find out what drives the need to reduce the administration costs in the European Life and Pensions industry. A Lumera Pulse survey was sent to 1 500 recipients working in the Life and Pensions industry in Europe.
The Insurance industry is one of the most regulated industries in the world and today’s economic climate confronts insurers with a multitude of challenges, such as greater price transparency, customer cost consciousness and sweeping regulatory changes. As a result, the competitive pressures are high and ensure that the insurance companies can’t charge huge premiums. They have to sell insurance at a price prevailing in the market. Hence, these companies can only become profitable if they control costs.
Administration costs, which are one of the largest expenses for life insurance companies, including among others authority reporting, risk assessments, claim settlements, actuarial services and IT operations. Specifically, the insurance industry defines administrative costs as all costs in excess of benefit payments.
By transforming traditional business models and migrating legacy product portfolios and policies to a modern platform designed for digital customer interactions and cost-efficient administration, life insurance companies can significantly reduce their administration costs while simultaneously improving customer service.
Below please find the detailed result of the survey to find out what drives the need for reducing the administration costs in the European Life and Pensions industry.