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Insurance Global Operations (IGO) Announces Results of it US Insurance Market Core Systems Research

11/06/2013 | 09:01am EDT

Aging in-house developed systems cited by both P&C and Group Life Carriers as top core processing systems challenge

Insurance Global Operations (IGO), a solution provider of core processing systems for the P&C and Life insurance markets, today announced the results of its industry research focused on core insurance processing systems in the US. Two hundred P&C and Group Life carriers were surveyed via phone interviews with questions focused on numbers, satisfaction levels, and ages of existing claims and policy administration systems, along with system and organizational challenges and planned initiatives.

A total of 123 P&C carriers and 77 Group Life carriers participated in the survey, which was performed by an independent third-party market research organization. IGO chose to survey both P&C and Group Life carriers to validate its assumption that satisfaction levels, challenges, and initiatives were similar between the market segments-- even given the differing lines of business, existing core systems, and functionality and processing needs.

Although carriers have made heavy investments in core legacy replacement initiatives over the past decade, the research results show a continued heavy reliance on in-house developed systems, with Group Life carriers reporting more than 75% of core systems as in-house/homegrown compared to P&C carriers at over 55%. Other survey results were relatively consistent between the P&C and Group Life carrier segments.

Other highlights from the policy and claims administration systems research results include:

  • More than 50% cite legacy systems as the top core system challenge, followed by integration and scalability/flexibility issues;
  • Over 40% of the carriers rate their satisfaction with their systems a "C" or below, based on an A to F grading scale;
  • 63% have one or more core system at least 11 years old, with 18% reporting systems older than 25 years;
  • The most significant business issues included 31% challenged to deliver speed to market, 30% dealing with slow manual processing, and 23% unable to meet deadlines.

These system challenges are driving companies to replace or augment their core systems, with more than 50% saying they had budgeted initiatives in the next 12-18 months. Those with planned initiatives over the next year, include 40 companies investing in new or replacement policy systems, 35 in new or replacement claims systems, and 11 in new end-to-end core processing systems.

Commenting on the research, Chad Hersh, Managing Director of Novarica's insurance practice, said, "These types of numbers make it no surprise that new, modern solutions like IGO6 are starting to crop up in the policy admin space. The survey certainly validates what we've found both in our surveys and in our dealings with carriers over the last year. Not only are carriers planning for core systems replacement projects, but budgeting for them as well. Other results are less surprising: Carriers have major challenges with multiple homegrown, legacy, COBOL solutions and need to find a solution."

"We thank the 200 carriers for taking the time and effort to participate in our recent research. While we can make assumptions about insurance markets, needs, and priorities, getting the validation from the carriers themselves really gives us the pulse of the industry and helps us better understand how to best serve both P&C and Group Life carriers," commented Didier Lamour, IGO's US CEO. "With the large percentage of in-house developed systems still in use, it's no wonder there is a tremendous amount of COBOL code combined with the lack of automation, integration, flexibility, and scalability resulting in significant challenges for carriers."

Lamour continued, "As satisfaction levels with legacy systems continue to decline and the industry confidence continues to grow relative to new and modern core processing systems, we expect to see an accelerated shift from the old to the new. No one ever said replacing legacy core systems was an easy effort, but with each success comes new lessons and new opportunities. We look forward to IGO being a part of many of those new system and legacy replacement success stories."

To view the results of the survey, please go to: http://www.igo6.com/2013InsuranceIndustrySurveyResults

About Insurance Global Operations (IGO)

IGO is a new breed of software provider delivering on its vision to change the status quo of insurance administration systems through the disruptive application of technology. IGO designs and develops its insurance solutions with the goal of helping carriers face the growing P&L pressures from increasing regulations and little return on assets. IGO understands that with these challenges comes the need for P&C and Life carriers to find a new way of processing that goes beyond claims, billing, and policy administration. IGO is headquartered in Minneapolis with offices in Paris, New York and Tunis. For additional information on IGO and IGO6 visit www.insuranceglobaloperations.com or call (817) 307-3256.

Insurance Global Operations
Lloyd Bishop
(817) 307-3256
lloyd.bishop@insuranceglobaloperations.com


© Business Wire 2013
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