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Different countries, different insurance cultures: how insurers can adapt their products

By Brad Worth, Senior Vice President, Channels and Product Solutions at insurance core and digital platform provider EIS.

What we like about international travel – the rich cultural diversity – is precisely the challenge that insurers operating across borders struggle with. We are not talking about different food, art or entertainment here, but different insurance cultures. Insurers who operate internationally, or are looking to operate internationally, enter a landscape where the way insurance products are bought and sold and even thought about can vary greatly. Adapting to the differences will define the success of the new market or product entry.

The traditional response to these regional differences has been to deploy separate product systems for each country. A newer and clearly better approach is to use one product platform for many countries to solve for the following key challenges.

Language barriers

The most obvious challenge faced by insurers who operate outside their country of origin is the language barrier. With a new language, the product is changed significantly in the way that it is described or presented to suit the new target market. Simply translating the product’s description may not be enough to convey the intended meaning. Carriers need to be able to communicate with consumers in a manner that is culturally familiar, regardless of the channel; whether that be call centres, online or through mobile devices.

Product definitions deviate

Insurance products fulfil requirements that are shaped by the target market’s demographic composition.  Some European countries are heavily regulated with standard definitions of insurance products, whilst other countries may embrace on-demand insurance, or have large gig economies. Carriers may define a motor product one way in the U.K., but it might be very different in France or Germany, despite a perception  of the product being largely the same.

Sales and distribution: key differences  

There are key differences in the way insurance products are sold and distributed from country to country, meaning the product itself can be different if it’s sold direct, by brokers or other intermediaries, or affinity partners. In the UK for example, the majority of personal lines of insurance is sold through aggregators, impacting how carriers package, present and differentiate insurance products. For this reason, the mix of channels for the sale of insurance products affects how carriers are able to build new or alter the design of their base product, as the role of brokers, agents or retailers differ in the value chain.

Varying regulations

Judicial and regulatory environments vary significantly between countries. This means that products, pricing and claims processing, as defined by regulatory bodies also varies, and some governments may mandate specific coverage whilst others may not. In addition, insurance administration can also differ. For example, the time-frame to acknowledge a claim event can require a six, or twelve hour acknowledgment of a claim, or a payment within thirty-six hours, whilst other countries may not have such requirements.

Regulatory reporting

When operating in different geographies, the regulatory reporting requirements also vary. Carriers, therefore, have to understand how often, what, when and where they have to report, and at what level of detail. Access to data is critical for carriers to meet these requirements.

The right tech to bridge boundaries

Insurers operating across multiple countries can solve the challenges by moving away from ridgid, complex and often constraining processes associated with legacy systems, and adopting modular approaches. This allows carriers to not only more easily adapt their product definitions, sales strategies and meet local regulations, but also better meet customer needs for coverage across geographies and drive efficiencies.

However, many insurance platforms operate along business lines, with processes built to make internal, as opposed to external, operations efficient. Everything from the workflow to the screens to the data model to the rules were all built around the lines of business. If an insurer is using a system built around motor in the U.K. and wanted to offer the same in France, it would almost have to replicate all parts of its policy system to accommodate regional differences, because they weren’t created as services or delivered as different modules.

Furthermore, insurers’ systems are often closed platforms. This means that policies cannot be customised easily to suit regional differences and provide customer-centric, tailored solutions. When looking for tech solutions, multinational insurers need open platforms that are seamlessly adaptable to different geographies to be competitive.

Why modular options are key

Modern, cloud-based systems are key to achieving modularity. An API-first architecture — software design that enables applications to easily interface with one another — can help carriers roll out new offerings in weeks instead of months and reduce legacy system dependence. This way organizations can rapidly develop a new business process without needing to significantly rewrite their product and application, for instance.

A new generation of core platforms support this “one product for many countries” approach by enabling insurers to deconstruct a product — separating the definition of the product, such as the rules and workflow and different underwriting guidelines, from the core administration capabilities.

With a product-centric platform, upgrades are complex because insurers have likely customized parts of the system so even in a single-country model, upgrades can be cumbersome due to the complex environment, including upstream and downstream integrations. But by separating the carrier rules and products from the core system, carriers can use the continuous integration/continuous delivery model and do full regression testing for the whole platform and upgrade very quickly. Carriers have to make sure they have separated the business logic for the customer or the product from the core system capabilities. This reduces the potential risk and minimizes the time to do upgrades. As a result, the new generation cloud-based, API-first modular product platforms help multinationals reuse technology investments from one country to another in unprecedented ways.

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