Trends in Life Insurance New Business and Underwriting Systems Usage

by Karen Monks,  Michael Fitzgerald, February 16, 2011
Industry Trends
North America

Abstract

New business and underwriting systems provide life insurers with opportunities for cost containment and organic growth.

A joint survey by Insurance Networking News (INN) and Celent assesses the level of interest for new business and automated underwriting systems in life insurance companies. In a new report, Trends in Life Insurance New Business and Underwriting Systems Usage, Celent reports on how the implementation of new business and underwriting systems can assist with organic growth, a key objective of life insurers coming out the Great Recession. The survey reveals interesting facts about how life insurers use new business and automated underwriting solutions.

“Most insurers who implemented a new business and underwriting system over three years ago did so with the objective of containing costs,” says Mike Fitzgerald, coauthor of the report and a Senior Analyst in Celent’s Insurance practice. “Most of the insurers with existing systems implemented them during a buoyant market, when growth rates were consistently high. Thus, concerns were on costs rather than revenue generation.” Celent found that insurers were very satisfied with these systems and report that they generally meet their original objectives.

Celent also found that companies with plans to invest in new business and underwriting systems in the next two years cite cost containment and developing new business as their key business objectives of the systems. “Insurers who are looking to implement a new business system today realize that the system will provide them with a tool that can help achieve organic growth in new markets like the growing middle market,” says Karen Monks, coauthor of the report and a Celent Insurance Analyst.

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].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

4

Challenges Faced by Life Insurers Regarding Organic Growth

5

Life New Business Process and Automation Overview

6

Industry Adoption of New Business and Underwriting Systems

8

Users of Purpose-Built New Business and Underwriting Systems

10

 

Years in Use"

10

 

Types of Systems

10

 

Objectives of a New Business and Underwriting System

11

 

System Functionality

12

 

Target Markets

14

 

Business Objectives

16

Future Plans

18

Conclusion

19

Leveraging Celent’s Expertise

20

 

Support for Financial Institutions

20

 

Support for Vendors

20

Related Celent Research

22

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