View from the Top: How flexible are you?

The insurance industry is going through more change than ever before. In just the last six months we’ve addressed the Gender Directive, the Legal Aid, Sentencing and Punishment of Offenders Act and the launch of the Financial Conduct Authority.

Market players are simultaneously racing to implement insurer-hosted rates, increase their fraud-prevention activity and make better use of data to rate more effectively. And, on top of this, the way consumers interact with brands is evolving almost daily. Unfortunately for many, while the need to address these changes is indisputable, the demand on IT systems is leaving them creaking under the strain.

This issue is curiously unique to the insurance sector. In most other industries technological innovation is seen as a necessity for survival, and a key means of gaining competitive advantage. The reliance on legacy systems in our market dictates a very tactical approach to IT development. When aggregators came onto the scene a decade ago, numerous insurance brands took significant time to join.

Many had to radically evolve their technology to respond to the volumes of new enquiries and, in some cases, their IT was not up to the rapid change and scheme builds required. Even today, some brands are still using the same quick-fix systems originally built to accommodate the aggregator move.

The impact of a tactical approach is that the business is always playing catch-up, while dealing with constant faults and system bugs. More importantly, it is unable to prepare for future growth or respond in a dynamic market.

Because the pace of change is ever increasing, having flexible systems in place is vital. Organisations need to drive IT capability, not the other way around – and this is especially relevant to those competing in this dynamic market.

We’ve all heard horror stories of businesses embarking on hugely expensive IT development to little ongoing benefit, but planned and well-executed change delivers sustainable value.

Scared to make the leap? The alternative is even more nerve‑wracking. Just ask a few questions of your business: how long did it take to be ready for the Gender Directive? Are systems prepared for the future use of social media data? Can you deliver the level of personalisation customers will soon expect from organisations holding so much data?

If the answer to either of the latter two questions is no, technology development should be on the priority list to ensure future prosperity. To quote Winston Churchill: “To improve is to change; to be perfect is to change often.”

Peter Thompson
Group director, intermediated businesses, BGL Group