Next Generation Insurance: Leading from the front.

Before we look at cross industry shared services, I think there are internal opportunites for Insurance companies to do look at $ spend on keep the lights on v/s run the business. Most of the insurance companies have support function within respective AOR's and if consolidation is done across AOR's - application support functions, compliance, environment, RTB and level 1, level 2 etc., there is significant reduction in cost that can be achieved. To your point on shared services across industry - BPO would be first of those functions that can be easily handled - Procurement, HR, etc.

Thought provoking article! Following are my thoughts as I see it from both ‘core’ and ‘supporting’ functions perspective.

I fully agree with the statement “supporting infrastructure (technology, systems and human resources) are the same as any other organization in that industry”. If it is a different industry, then also IT resources are same or similar. However, ‘core’ business resources are more likely to be different - underwriters of insurance industry can not do the job of ‘warehouse manager’ of retail industry. In fact, the more specialized it gets, the sharing or reuse opportunity gets lower. Some may argue an underwriter in P&C company cannot easily play the role of an underwriter in life insurance company – he/she needs training specific to that line. Having said that, there are resources working in ‘supporting’ functions – like accounting, finance & treasury etc – we can fairly expect these resources, after some initial acclimatization, should be able to work in any industry, whether it is insurance or retail.

However, I would offer a slightly different opinion on the process front for ‘core’ processes. Though in the soul everything is a workflow – sequenced tasks – done by different roles. But the nature of these core tasks and roles differ significantly across industries and also within different business functions. Like the new business workflow is totally different than the claims workflow, even though both are in the same insurance industry. Having said that, here also, I agree that some ‘supporting’ processes are similar across industry. The way an insurance company generates premium billing invoice to its producer is similar in nature what a retail company would follow for its invoice to a retail shop. In fact, if we stretch our imagination, we can think that the premium billing (new business/underwriting support function) is similar to deductible recovery (claims support function).

So following what Sanjay suggested, there lies a good opportunity to leverage these people across industry. I see a bigger opportunity in holding companies. As we know, due to business cycles, different companies have different peak times. So a big holding company which has different types of industries in its group, can share/transfer the resources from ‘supporting functions’ – both infrastructure and human – based on the needs, increasing the overall effectiveness & utilization.