Closed Block Spectrum Report: Life, Annuities, and Pension Edition
Today's life, annuity, and pension firm is struggling with the continuation of a global economic downturn where competition for business is fierce, investment returns are low, and the need to generate an operating profit to shareholders, members, and policyholders is still high. These factors are leading insurers to ask what they should do about the management of products that they no longer consider strategic.
Closed blocks are usually generated either by the discontinuation of unprofitable products or by a change in strategic focus. Building on Celent’s 2012 report on the Strategies and Options for Managing Closed Blocks, this spectrum report aims to provide details of specific vendor propositions targeted at helping insurers address their closed blocks. The report focuses solely on options for managing the run-off internally, targeting the reduction of operating costs and reducing the technology obsolescence risk over the long term. In total, 12 vendors have been profiled for their consulting, business process outsourcing, and technology transformation capabilities.
Closed block divestiture or exposure containment via a reinsurance arrangement have not been addressed in this report.
“In the current economic climate, insurers are under pressure to perform financially and contain their liabilities,” says Karen Monks, Analyst with Celent’s North American Insurance Group and coauthor of the report. “For insurers keen to retain customer ownership, BPO and technology transformation remain popular options for containing costs and reducing the risk of technology obsolescence over the lifetime of a block.
Celent believes that there are a growing number of proven technology propositions that can be employed as part of a transformation without the need to sell or outsource the problem.
“More vendors are looking to apply their skills and expertise in operational transformation to the closed block market.” says Jamie Macgregor, Senior Analyst with Celent’s EMEA Insurance Group and coauthor of the report. “When faced with a greater number of targeted propositions, insurers need to exercise care supported by effective due diligence when selecting a vendor partner. With multiyear deals and the long tail associated with closed block policies, the cost of selecting the wrong partner could have a far-reaching impact on the shareholder, policyholder, and regulator.”
Much of the information presented in this report is directly taken from each participating vendor. No formal evaluation or comparative analysis of the propositions has been undertaken. The aim of this report is simply to provide an overview of the propositions being marketed currently. Over time, in line with growth in this market, Celent expects the number of vendor propositions to increase.
This 116-page report contains 78 tables and 33 figures.
Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].
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