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In a political season that has turned the rules upside down, U.S.-based insurance companies are understandably nervous. Sure, job growth is up, but the stock market is unstable, and in terms of insurance, domestically, all lines of business are in flux. Personal and commercial auto are facing disruptions from George Jetson and telematics. Health insurance is being regulated to death by the Affordable Care Act (ACA) and driven into new business corrals called exchanges. Property and casualty (P&C) insurers are bracing for the next biggest CAT event, and life companies are figuring out wearables. All of these developments only increase the challenges for developing a multinational insurance strategy in an increasingly connected business and consumer environment.
It’s not just the U.S. dealing with slower-than-projected growth. The global business landscape is rebalancing in favor of economic growth in emerging markets. Since this global market shift and opportunity is not net new, one might wrongly believe insurance companies already have a good handle on how to proceed. However, the prevailing reality is that other initiatives, such as developing a mobile strategy, ensuring cyber security, and meeting accessibility/self-service demands by policyholders, have commanded time, budget, and board-level attention. Most insurers, in fact, are still shaping multinational strategies and building best practices for operationalizing the business for both scale and compliance.
It doesn’t get any easier. Insurers that are further along in terms of moving into multinational are struggling to improve controls while meeting demand, but finding it hard to keep pace mainly because broad execution gaps exist. Given the difficulties with the number of jurisdictional variations, the mix of in-house and local or in-country resources, and the silos of systems involved in disparate processes, it’s hard not to conclude that multinational insurance is not for everyone.
Competing Regulatory Priorities
At first blush, multinational insurance business looks like any other line of business, and has surface similarities, such as product development, sales, distribution channel management, underwriting, core administration (policy, billing and claims), reinsurance and post-sales servicing. But, insurers pursuing multinational business are facing external challenges that make operationalizing multinational business a very steep hill to climb.
Having already acclimated to doing business in the heavily regulated U.S. market, the task learning new jurisdictions, preferences of foreign regulatory bodies, and how in-place legislation will impact products that can be offered, is difficult at best. And insurers are not the only ones pursuing the economic opportunities created by the global expansion of businesses. Tax and regulatory authorities in these emerging markets who an economic opportunity are adding complexities to the already complex business of multinational insurance.
Location, Location, Location
For insurance companies which have primarily operated domestically in the past, resources for supporting new multinational programs are generally not co-located. Often, lead underwriters are geographically disconnected from new in-country counterparts managing the local policy—printing declaration pages, collecting premiums, and the like—a situation which adds drag on turnaround times. And, working through instant messaging, collaboration tools and WebEx (or other conferencing interfaces) often isn’t possible due to time zone and language differences, making email the best of the bad options for getting work done across multiple time zones.
Working through email adds unproductive layers to the job of the lead underwriting office. In this scenario, workflow is dictated in reverse order by when emails come in, by priorities flagged in Excel worksheets, in an Access database, or worse yet, on a whiteboard. This means call center employees, marketing staff, customer service representatives, underwriters and agents alike are sacrificing significant time managing email, looking for internal information, or tracking down colleagues who can help with specific tasks. Beyond the unproductive workflow, emails and Excel worksheets coupled with other tools are hard to audit, monitor and measure. This lack of transparency puts insurers at risk from a time perspective, a compliance perspective, and frequently, from a coverage perspective.
The next largest, and related, challenge is that lead underwriters and in-country partners may not be working on the same systems. Unlike national programs where a team of underwriters working together use the same underwriting guidelines, premium calculation engines and currencies, pricing charts as well as policy systems, lead and in-country resources generally work on systems that serve their local/individual functional need in their native currency and are not connected. The lack of system connectivity brings things full circle to email and all its associated challenges with real-time visibility and work management.
This situation leaves insurers building brittle custom applications that fill the specific needs of a specific function within a specific country, but which are not extensible or configurable, and which require expensive custom coding, highly-specialized skills, and don’t support full functionality on all desktop and mobile platforms. The current approach to custom applications misses many functional requirements critical to compliant multinational business, such as real-time connectivity internally and externally to partners. Therefore, partners are called upon to leverage their own internal systems and then report back. The result: high administration cost, low visibility and a great deal of manual work needed to bridge the gaps between systems and people—both inside and outside of the organization.
Connecting a Multinational Business
In its simplest form, the business of multinational insurance is merely combinations of data, decisions based on that data, and business processes executed as a result of those decisions. It is people in various countries working collectively to put a program or proposal together or to execute post-bind activities or work on a claim. The reality is more complex, more challenging to master.
The solution is a common platform from which modern business applications can be rapidly created and utilized—all sharing the same data, via a single, intuitive, collaborative user interface (UI) which functions the same on a desktop, a tablet, a smartphone, an Apple watch, or whatever else may come along. Such a platform would accelerate the pace of work, and add actionable intelligence to decision-making. It would also provide radical new levels of productivity, transparency, and success across any insurer’s multinational business.