World View

Insurance customers in the United States know the value of insurance–both to protect their property against risk and as an investment tool–probably more than people in any other country. However, the soft market here has meant the U.S. is viewed as a less inviting place to do business than some of the growing markets of the world, according to Scott Mampre, vice president of insurance with Capgemini Financial Services.

"The trend seems to be more of the U.S. companies trying to go global," indicates Mampre, rather than foreign companies entering the U.S. market. "Firms in Europe and other places recognize the U.S. has the highest level of insurance products, but they also recognize it's a mature market."

When a company goes into a mature market, its best hope is to take market share from the fringes. Although that still is an attractive strategy for American insurers operating in the U.S., the worldwide trend tends to be more toward globalization and moving into newer, faster-growing marketplaces. "Although there is a soft market globally, there is more growth opportunity where the market is rising as opposed to where it is more stable," says Mampre.

When dissecting the U.S. market vs. other mature markets, Mampre finds U.S. insurance buyers have a stronger-than-average positive perspective of insurance as a tool to protect their property and family. In the global perspective, around 58 percent of the respondents to the Capgemini study cited financial growth as a reason to buy insurance, whereas in the U.S. the number is 81 percent. "Clearly there is a risk-protection profile in the U.S.," observes Mampre. "If you look at the growing markets, they are beginning to look at wealth-portfolio-type products."

Insurance as a tool for financial wealth had experienced some growth when annuities first came out, but when the strategy received some bad press, the market changed, notes Mampre. "Financial advisors backed away from using that type of tool and focused on it as a protection tool instead of a wealth management tool." Today, though, the trend is reversing, and Mampre attributes the change to improved marketing by American insurers.

Mampre asserts policy administration systems of global insurers need to support changes. "Historically, if an organization is working with legacy-type systems, it is challenging and expensive to make modifications, and therefore it is inhibiting the ability to compete on the speed-to-market and fast-follower basis," he says.

In order to make technology an enabler, global carriers need to revamp their front office to be much more flexible and provide more information to brokers and agents, continues Mampre. They also need to review how they service policies and create more of a service-oriented architecture that allows them to externalize their business rules and quickly adapt in the marketplace. "Companies now are undergoing major transformation, whether they are building in .NET or Java or going out to vendor packages to support their needs," he says. "Investments in these types of products are high, but [insurers] are doing that to get ahead of the market."

Mampre believes standards continue to mature as carriers become more global. He points out new markets are opening to Western-based organizations, and as such, they are working to revamp their standards to accept global partners. "As outsourcing becomes a larger component for the Western world, working with outsource partners in India and China and having a consistent set of standards is very important," he says. "There has been a greater emphasis as the markets are globalizing."

Insurers worldwide are not growing as they have in the past, and Mampre contends one problem is carriers are not as targeted on their goals as they should be. "They need to better understand their customer bases and do more segmentation in understanding how their services apply to those different segments," he says. "Those segments require different capabilities, and this needs to relate back to how the company operates–not only the IT architecture but also the business processes."