Executive Summary

Insurers face a multitude of challenges in the current market. Competition from new entrants is increasing and consumers have higher expectations. Trust and loyalty are hard to win but easy to lose. Aging technology often severely restricts the ability of insurers to meet changing demands and deliver the products and service levels expected by customers.

Differentiation and service excellence are key to success but currently the insurance landscape is bland. Differentiation is too often focussed solely on price, with the result that service is not genuinely targeted at the individual customer.

The following paper describes the benefits of using the new breed of quote and rating technology to develop a truly personal service for your customer.

A flexible rating capability is an essential cornerstone in the push for personalisation. Rating is fundamental to new product offerings. If managed effectively, it can deliver a competitive edge and, most importantly, it directly impacts revenue. Flexible rating, when coupled with a creative quoting capability, can deliver true differentiation.

The Need for Flexible Rating

Product pricing impacts both revenue and cost. Consequently, product pricing is a key determinant of the bottom line. Ultimately, effective product pricing results from understanding and responding to the combination of risk, demand, and competition. However, all three are constantly changing: consumer profiles and external factors alter the risk, demand can be fickle, and your competitors are a moving target.

If you can respond to these changes effectively, you maintain a competitive edge. But to achieve this, you need the following from your system’s rating capabilities:

  • Flexibility & Accuracy
    Complex and flexible rating for individuals or groups must be supported. It must include elements such as multi-tiered pricing factors and unique discounts. You need penny perfect rating, every time.
  • Consistency
    Rating responses must be consistent across all distribution channels for every customer interaction.
  • Speed to market
    Rating changes must be deployable in days and weeks rather than months.

The problem is that many insurers operate older policy administration systems that embed their rating within the source code: speed to market is not an option with these systems. To add to the challenge, the same insurers often need to run multiple systems that demand duplication of effort: there is a real danger of both inaccuracy and inconsistency when changes must be made.

Older policy administration systems present a natural barrier to change. An insurer implementing rating with such a system can rarely respond quickly to market forces.

Modern Rating Solutions

Today’s best-of-breed rating solutions overcome the legacy issues and deliver the tools you need. A modern rating solution, such as bluescape:rating from Total Systems plc, offers the following:

  • Performance
    Fast, real-time, responses to all rating requests.
  • Easy to use
    New pricing structures and regular rate updates are delivered through configuration not software development. Changes can be performed in minutes by business users and promoted to the live environment after testing. This speeds up product development and significantly reduces maintenance effort and reliance on IT departments.
  • Infinite rating options
    Rating tiers and advanced logic that allow you to develop and change specific risk factors to increase or decrease an insured’s premium.
  • Multiple lines of business
    Support for multiple products in any line of business, any location, any currency.
  • Centralised rating service
    A single rating service to support all of your systems. This provides both efficiency and consistency – all the relevant systems can use your new or updated pricing structures as soon as you have deployed them.

Rating and Quote Combined

By using the right rating solution, a lot of the old problems are solved. You can quickly model any pricing structure for any form of risk data across any line of business. But the true power comes from combining this with creative use of a quote module that enables you to define flexible product structures. This is how true differentiation is achieved.

A modern quote module enables you to offer any combination of products or benefits from all lines of business without sacrificing speed of response.

For example, the bluescape:quote service manages incoming quote requests and automatically determines the range of products or benefits against which they can be evaluated. For each core product that it identifies, the service calls the appropriate rating service for pricing and underwriting evaluation. It then combines the rating results it receives into relevant quotes for the quotable packages that you have defined.

The bluescape:quote service can handle requests from any channel. It can respond with quotes for any package that you have set up with the configuration tools. Any combination of cover can be arranged and quoted using the sophisticated product rules under your control.

You can be creative by offering package prices either because the customers have chosen a collection of related add-ons with their main product, or because they have chosen a variety of covers for dissimilar lines of business.

As with a rating module, speed to market is essential. With bluescape:quote, once a product and its rating rules have been established, you can quickly set up and maintain the packages and terms under which you want to offer them. You can set up any combination of cover that you are prepared to provide.

Differentiation

Differentiation means standing out from the competition. For example: being able to offer customers what they want, when they want it, in a way that the competition has yet to achieve.

In order to do this, you need to be able to spot the gap in the market and change your offering accordingly. Just recognising that consumers are time-poor and increasingly using internet and mobile technology is no longer enough. Simply delivering financial products through these channels is no longer a guarantee of success. It’s the ability to test, learn and change your products quickly that is essential.

There is no doubt that positive differentiation attracts and retains customers. However, so often, both IT systems and lack of resource are barriers to change. The right technology can help overcome these issues and support agile change and innovation without the need for long and complex development projects.

Scalability

Modern software supports small test-and-learn projects that can be moved easily to full deployment with potential for handling millions of policies.

Software like bluescape has the infrastructure that you need for scaling the solution as your business demands grow. From the outset, the bluescape modules can integrate with any and all policy administration systems, with front-end agent Web portals, with aggregators and other third-party systems. Further down the line, the addition of new distribution channels or products can be tackled with confidence.

Conclusion

Combining market leading quote and rating software will support innovation and change without the need for long complex projects. All product design, pricing, and distribution can be personalised for your customers. There is potential for true differentiation. Customers want speed and personalisation and flexibility is the key.

Customers want to receive quotes for individual products and be able to compare with bundled options quickly and easily. Insurers ideally want to target risk and pricing to match the profile of the individual customer. By combining the right quote and rating technology you can achieve both.