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January 23, 2007
European Life Insurers Outpace North American Counterparts at Systems Consolidation, According to Accenture Survey

Consolidation of policy administration systems reduces operating costs by 19 percent on average globally
NEW YORK; Jan. 23, 2007 – European and Asian life insurers are outpacing their North American counterparts at streamlining and centralizing their policy administration systems – the core systems that support and deliver insurance products for their customers, according to a global survey of more than 100 insurance technology professionals, which was commissioned by Accenture.

The survey revealed that about one-fourth (24 percent) of North American respondents have consolidated their policy administration systems for traditional life insurance products, compared to half (49 percent) of European respondents and one-third (33 percent) of Asian respondents. Nearly two-thirds (64 percent) of North American respondents are discussing or implementing a strategy to consolidate their traditional life insurance policy administration systems.

Globally, respondents that have consolidated their policy administration systems on average reported a 19 percent reduction in operating costs, a 25 percent reduction in IT costs, and a 35 percent increase in the speed at which they are able to introduce new products to their customers.

“Our research indicates that the relatively high degree of systems consolidation among European insurers, if properly leveraged, could bring real strategic advantages as these insurers pursue new markets domestically and abroad,” said Serge Callet, global managing director of Accenture’s Insurance practice. “Indeed, for any insurer facing the challenges of product diversification, service-quality improvement, and merger integration, having a streamlined and nimble policy administration system will be vital.”

European respondents were three times as likely as North American respondents (30 percent versus 9 percent, respectively) to say their companies will, within two years, be part of a merger or acquisition – a major cause of system redundancies, according to the survey.

The survey also suggests that North American life insurers are operating a greater number of policy administration systems than insurers elsewhere. One-third (34 percent) of respondents in North America said their companies use 11 or more product platforms, compared with one-fifth (20 percent) of European respondents.

“The abundance of legacy systems among North American life insurers is perhaps their greatest roadblock to competitiveness and efficiency today,” said Dave Hollander, managing director and head of Accenture’s life insurance solutions. “In order to succeed, North American life insurers must simultaneously pursue growth and cost reduction by simplifying the policy administration process and reducing the number of systems in order to more quickly and efficiently deliver diverse and innovative insurance products to their customers.”

The survey also revealed that:

·         Forty-three percent of respondents that have consolidated their policy administration systems used business process outsourcing (BPO) in the effort – most of them for both closed and open books policies.

·         Respondents that used BPO in their consolidation efforts were 26 percent more likely to report high levels of satisfaction and 16 percent more likely to report cost-reduction benefits than those that did not use outsourcing. 

·         Seventy-five percent of respondents in Asia-Pacific reported a significant proliferation of policy administration systems over the past five to seven years, compared to 40 percent in North America and 43 percent in Europe.

Methodology

The survey consisted of telephone interviews with 112 executives at firms that sell and administer life insurance, who are involved in the decisions to retire or consolidate policy administration platforms. Fifty-three percent of the companies surveyed report annual premiums of more than $1 billion; 47 percent report premiums of more than $500 million. The survey, which was conducted between May and August 2006, involved 60 respondents in Europe, 40 respondents in North America and 12 respondents in Asia-Pacific.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments.  With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills, and technologies to help clients improve their performance.  With approximately 146,000 people in 49 countries, the company generated net revenues of US$16.65 billion for the fiscal year ended Aug. 31, 2006. Its home page is www.accenture.com.