Insurance industry executives are constantly hunting for ways to improve efficiency and cut costs to remain competitive. Deloitte has done some of the work for them, with its 12th annual benchmarking studies, LIONS 2007 and ACES 2007, which look at back-office operations at life insurance and annuity providers.
The life insurance industry has made progress in cost-cutting efficiency, the reports find, but there is room for improvement, especially in the following areas:
- Service standards can be improved, especially at call centers.
- Roughly one-third of overall baseline costs are consumed by new business and customer service operations and related IT expenses.
- New business operations, customer service operations and related IT divide the costs evenly, so insurers need to manage the whole business process model, not just one area.
- Annuity providers also can improve:
- Leveraging eService capabilities.
- Reducing the not-in-good-order rate by addressing root causes.
- Expanding use of straightthrough-processing.
- Expanding outsourcing.
“Given the increasingly competitive and slow-growth environment for life insurance products, cost containment through operational efficiency is considered a top priority for executives,” says Deloitte’s Joe Guastella. “But it is vital executives recognize that success depends not just on committing to increase efficiencies – it also requires focusing on the ones that have the most impact.”
For more information, visit www.deloitte.com.