By Brad Worth, Senior Vice President, Channels and Product Solutions, EIS Group, Ltd.
Businesses operating in multiple countries face several challenges. However, due to product, distribution and regulatory complexity, multinational insurance companies face an even more difficult operating environment.
Insurers that sell products domestically already deal with issues around operational efficiency, harnessing data for competitive advantage and satisfying increasingly demanding customers — if their systems are even advanced enough for them to gain a unified understanding of current and former policyholders. But problems are compounded when they expand to different nations and new solutions are needed.
There are a variety of regional differences, including how products are defined in varying countries, differences in how products are sold and distributed, product variations and a host of disparate regulatory requirements. There are five main areas that prove to be challenging to multinational insurers.
- Language barriers. An obvious but major challenge for any carrier operating in different geographies is dealing with different languages. Changing the language changes the product in basic ways – how it is presented, described, and documented. As soon as they operate in another country, carriers need 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. Terminology differs from one language to another and simply translating text may lead to errors. Policy descriptions in one country may fail to convey the intended meaning in another.
- Varied product definitions. Insurance fulfills a need in the marketplace that varies depending on the demographics of a particular country, who’s buying coverage and how they’re purchasing policies. Some European countries have a large gig economy or have embraced on-demand insurance, while others follow a more traditional, heavily-regulated and very standard definition of insurance products. Carriers might classify a motor product one way in the U.K., but it might be very different in Spain or Portugal, despite the fact we may think of the products as 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, the vast majority of the personal lines business is sold through an aggregator, which modifies how carriers should package, present and differentiate products. The range of channels, such as 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 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 and regions. Some locales 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 do not have the same stipulations.
- Differences in regulatory reporting requirements. The regulatory reporting requirements also vary considerably. When operating in different geographies, carriers have to know 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 satisfying these requirements.
Ultimately, there are a slew of technology ramifications and requirements for operating internationally. But the right technology platform can help insurance organizations successfully manage the vagaries.
Putting Tech to the Task
Multinational insurers can manage different product requirements across jurisdictions by moving from complex, constraining processes to platforms that enable a more modular approach. This will help carriers to not only more easily adapt their product definitions, sales strategies and meet local regulations, but also better serve customer needs 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 aren’t able to create customized, customer-centered offerings, crucial to meeting customer demands for personalized products. Multinational insurers require platforms that can swiftly and easily be changed up for different geographies so they can operate competitively in these 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 quickly introduce a new business process without needing to significantly rewrite their product and application.
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 always complex because insurers have likely customized parts of the system so that even in a single-country model, upgrades prove 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 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 core and digital platform provider EIS.
