nsurance executives in many ways must feel like the proverbial kid in a candy shop. Aging populations in Western nations, deregulation of key markets, spectacular growth of the middle class in Asia and consumers embracing the use of new technologies are among the major trends creating huge growth opportunities for insurance companies—at least for those that can scale to take advantage.

1. White Paper:
FINANCIAL SERVICES
HOW TO CREATE A PLATFORM FOR
THE 21ST CENTURY INSURANCE FIRM

2. HOW TO CREATE A PLATFORM FOR
THE 21ST CENTURY INSURANCE FIRM
IN THIS WHITE PAPER:
INTRODUCTION 1
A NEW ERA FOR INSURANCE 2
THE EVOLUTION OF IT:
FROM 20TH TO 21ST CENTURIES 3
IT/BUSINESS ALIGNMENT 4
STANDARDIZATION, WORKFLOW AND
NETWORKING TECHNOLOGIES 5
WHO IS LEADING THE WAY?
A VIEW ON THE GROUND 5
CUSTOMER MANAGEMENT 5
PROCESS 6
ENTERPRISE ARCHITECTURE 7
INFORMATION 8
CHANNELS 9
COMMUNICATIONS 9
SOURCING 10
CONCLUSION 11
GLOBAL MANAGEMENT AND
TECHNOLOGY CONSULTING FOR
TODAY’S BUSINESS ENVIRONMENT 12
ABOUT THE AUTHORS 12
INTRODUCTION
Insurance executives in many ways must feel like the
proverbial kid in a candy shop. Aging populations
in Western nations, deregulation of key markets,
spectacular growth of the middle class in Asia and
consumers embracing the use of new technologies
are among the major trends creating huge growth
opportunities for insurance companies—at least for
those that can scale to take advantage.
Therein lies the problem, however. For some insurers,
these opportunities—these shelves of sweet good-
ies—may be just beyond reach. Many insurance
executives feel that technology infrastructure—espe-
cially legacy systems—is a significant impediment
to progress as they attempt to take advantage of an
increasingly global insurance industry. It is for this
reason that insurance companies, especially many in
Europe and North America, are investing in enabling
new systems.
Which types of systems are leading insurers invest-
ing in and for what purpose? What is their vision for
leveraging technology in the first decades of the 21st
century as the industry landscape rapidly changes? Is
too much emphasis being placed on problems asso-
ciated with legacy systems? To find out, BearingPoint
contracted with Datamonitor to interview technol-
ogy executives at leading global insurance companies.
The goals of this qualitative research were to find out
how these insurers are transforming their operations
for the new century and articulate a vision of how
they can succeed in the new century’s challenging
environment.
1 BEARINGPOINT

3. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
2 BEARINGPOINT
are increasingly entering into novel strategic alli-
ances that position them in new markets according
to the strengths of both or all parties.
Technological evolution. The innovation spurred
by the creation and expansion of the Internet has
changed the business landscape in profound ways.
It has enabled an entirely new business operating
model and fundamentally altered consumer behav-
ior. The most important advance for IT may be the
development of networking technology that is poised
to deliver greater economies of scale and efficiency
and reduce some operating costs to the vanishing
point. Meanwhile, wireline and wireless communi-
cations based on Internet Protocol will enable much
greater flexibility in connecting the insurers with
clients, sellers and each other.
To capitalize on the opportunities in this market-
place, the best insurers are lining up to realize all the
advantages—new markets, scale economies, open
computing, automation and multisource opera-
tions—while avoiding the downside—increased risk,
commoditization, and more demanding and disloyal
customers. Figure 1 highlights the changing charac-
teristics of the global technology industry.
Although regional and niche insurers will remain viable
in the 21st century, economies of scale will concen-
trate premiums, assets and global market share among
a smaller group of very large insurers. Technology will
ensure that they are able to develop and distribute
products on a mass scale. Partnerships and strategic
agreements, rather than mergers and acquisitions, will
enable the “one-stop shop” model.
Independent channels will increasingly be the source
for life products. In the next 10 years, captive agents
will have largely disappeared in the West, while, in
developing economies, they will gradually be over-
taken by banks, in alliance with both domestic and
This global survey report explores the direction of the
global insurance industry over the next five to 10
years. The observations of industry leaders presented
here provide a vision of what the 21st century insur-
ance company may look like and how IT is being
used to achieve that vision.
A NEW ERA FOR INSURANCE
The evolution of the global insurance industry is a
reaction to the forces reshaping everything from global
supply and demand to market competition to technol-
ogy. The most progressive insurers are taking steps
to capitalize on unprecedented growth opportunities
while avoiding the risks. The major trends affecting
insurance in the 21st century are:
Socioeconomic change. The aging of populations
in Western nations, combined with the reduction or
elimination of state and corporate pension plans, will
create vast new opportunities for life insurance in the
United States and Europe. Meanwhile, the moderni-
zation of the large Asian economies will create a
new, multibillion-member middle class. China may
offer the most dramatic example of the growth of
wealth because the inclusion of China in the World
Trade Organization (WTO) has sped its transition to
free-market capitalism. According to China Pacific
Insurance Company Group CIO Richard Cheng, the
“Chinese government benefit program will not be
sufficient to this middle class,” leaving the door open
for domestic and foreign insurers.
(De)regulation. The convergence of financial services
set in motion by industry deregulation, such as the
Gramm-Leach-Bliley Act and the deregulation of
the Chinese market, has resulted in consolidation,
new markets, new competitors and the creation of
interrelated, cross-industry value chains. To estab-
lish operations in high-growth geographies, insurers

4. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
WHITE PAPER 3WHITE PAPER 3
foreign carriers. Novel partnerships between insurers
may also emerge, particularly in a rapidly denation-
alizing China.
The Internet and wireless communications will likely
emerge as serious sales channels; they are beginning to
make inroads in non-life sales today and, in 10 years,
will begin to take market share from independent
channels. Insurers in Japan and China, where the use
of wireless transactions is ahead of that in the West,
have begun to offer travel insurance via wireless
accounts, allowing for “impulse” purchases on the fly.
FIGURE 1. THE INDUSTRY VISION
20TH CENTURY
MARKETS • National concentration
• Growth in developed markets
• Insurance/some FS integration
COMPETITION • Polarized: life and non-life
• Insurer vs. insurer
• Mutual model
DISTRIBUTION • Channel segregation
• Direct/independent on unique platforms
• Distributing products
PRODUCTS • Internal strategic/internal development
• Complex
• Insurer-driven
RISK MANAGEMENT/
UNDERWRITING
• Affinity groups/some tiered underwriting
• Reactive modeling
• Actuarial risk focus
TECHNOLOGY
STRATEGY
• Group: decentralized
• Business: isolated/some integration
• Geography-defined
• IT as “client”
Source: Datamonitor
21ST CENTURY
• Global concentration
• Growth in developing markets
• Cross FS global alliances
• Dynamic: life vs. non-life
• Insurer vs. ???
• Total demutualization
• Channel integration
• Direct/independent on common platforms
• Distributing information
• Internal strategic/external development
• Simple/standardized
• Customer-driven
• Fully tiered underwriting/automated
• Predictive modeling
• Operational risk focus
• Group: centralized
• Business line federation/mainly integrated
• Geography-agnostic
• IT as “partner”
Furthermore, the notion of “distribution” itself will
change, as it becomes less about transferring and sell-
ing products and more about sharing information,
whether in a B2B or B2B2C context.
THE EVOLUTION OF IT:
FROM 20TH TO 21ST CENTURIES
The insurance industry is poised to benefit from a
number of new technologies, as well as the novel
application of existing techniques, to realize greater

5. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
4 BEARINGPOINT
FIGURE 2. THE STRATEGIC VISION
20TH CENTURY
CUSTOMER
MANAGEMENT
• Imperative: channel provision
• Price-led
• Acquisition
PROCESS • Largely manual
• Workflow/digital documents
ENTERPRISE
ARCHITECTURE
• Point-to-point networking
• Back-office functionality resides
in legacy
• Centralized computing
INFORMATION • Siloed
• Product-defined
• Structured vs. unstructured
• External fraud detection/claims
CHANNELS • Manual interaction
• Disconnected operations
• Limited partner interaction
COMMUNICATIONS • PBX
• Phone/fax
• Manual transactions
SOURCING • Internal dominant—tactical
• Long-term outsourcing contracts
Source: Datamonitor
21ST CENTURY
• Imperative: analytics
• Price- and service-led
• Retention
• Largely automated
• Business process management engines/straight-
through processing
• Service-oriented architecture
• Reference-/event-driven (portfolio management,
underwriting)
• Distributed/grid computing
• Integrated
• Customer-defined
• Automated and dynamic taxonomy
• Internal/auto fraud/claims, identity theft
• Portal front end (B2B2C)
• Shared back office
• Partner network (claims, underwriting)
• Voice over Internet Protocol
• Wireless LAN, field agents, claims settlement
• Electronic transactions
• Best sourcing—strategic
• Centralized procurement
• Standardized
customer-centricity, improve IT flexibility and remain
competitive in a rapidly changing industry. Figure 2
highlights how these key technologies can change in
the next five to 10 years.
IT/BUSINESS ALIGNMENT
During the last 20 years or so, an understanding of
the importance of better integration of business and
IT strategies emerged. In some cases, it was the gal-
vanizing onset of the year 2000; for others, it was
the buy-in of technological promise amid the dotcom
hype. Nevertheless, for many of the largest financial
services companies, the days when business and IT
would negotiate, or in some cases battle, over strategy
and budget dollars came to an end. Among the lead-
ing insurers today, IT is becoming so fully integrated
into the business decision-making process as to appear
almost invisible.
Our conversations with insurers repeatedly illustrate
the importance of IT and business alignment in
establishing effective long-term technology strategy.
General insurer ING Canada began the process of
implementing a central IT function in 1996 that
paralleled its strategy of common platforms across
insurance lines. ING Canada currently sees itself as
highly centralized in IT infrastructure, applications
VISIONARIES

6. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
WHITE PAPER 5
from here? Or, as some in the industry might lament,
can we get there from here? Many of the technologies
cited by our respondents are not new. The concept
of service-oriented architecture (SOA), for example,
has existed for years, but only with the recent devel-
opment of Web services has it become a practical
proposition. Claim notification enabled by radio fre-
quency identification (RFID) and real-time, driver-
directed premium adjustments are tantalizing ideas
to technologists, but with the industry still address-
ing core systems, it is unlikely these solutions will
reach the mainstream for at least another decade.
Clearly, the insurance industry remains in a transition
period, with most major carriers taking the necessary
steps to prepare, perhaps, for the “science fiction”
possibilities sometime in the future. By implement-
ing technology change in a steady and measurable
fashion, with business objectives driving strategy,
insurers will be able to achieve the balance between
maintaining profitability and solvency while estab-
lishing the flexibility necessary to keep pace with
industry change. The leaders in this area are making
progress toward the 21st century vision by estab-
lishing new techniques to address the most pressing
business concerns.
CUSTOMER MANAGEMENT
The primacy of the customer has arrived in the
insurance industry. In the next 10 years, insurers will
likely have established a uniform channel strategy in
which consumers can choose between an agent, bank,
Internet or wireless/PDA as their means of buying
insurance. The attention will begin to shift to more
advanced customer analytics that record, analyze and
manage all aspects of the customer/insurer relation-
ship, thus improving cross-sell opportunities and
fraud detection.
Before the analytics can be used effectively, however,
insurers must make sure channels are well estab-
and strategy, despite leaving some decision-making
authority to regional offices. This centralization has
allowed it to consolidate legacy systems on a common
platform while driving long-term project develop-
ment, including four- to six-year plans for enterprise
data integration and electronic transactions.
A large European life insurer indicated that its inte-
gration efforts led to an enterprisewide, “two-track
process”—continual evaluation of all infrastructure
(to ensure lower costs) and processes (to ensure flex-
ibility). The insurer believes that by establishing
ongoing enterprisewide IT evaluation, “we will be
able to build unique and new capabilities five, 10,
15 years into the future.”
STANDARDIZATION, WORKFLOW AND
NETWORKING TECHNOLOGIES
While the centralization of business and IT strategy
has fostered more effective strategic thinking, the
development of the Internet, Web services and middle-
ware are enabling the execution. Standards in IT
infrastructure, networking, Web services, and, most
important, the evolution of open and componen-
tized architectures are enabling the separation of
IT management and IT strategy—a huge step in
the evolution of a 21st century vision. Business and
IT executives can now realistically envision the day
when it will be possible to remove the management,
maintenance and even development of technol-
ogy applications from an organization, leaving the
insurer to concentrate on customer service, product
innovation, sales and marketing, branding, and cor-
porate strategy.
WHO IS LEADING THE WAY?
A VIEW ON THE GROUND
With the vision of the next five to 10 years taking
form, the question remains, how do we get there

7. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
6 BEARINGPOINT
lished. The industry’s experience with customer
relationship management (CRM) several years ago
has left IT departments wary. In what has become a
lesson on the dangers of embracing technological
hype without an understanding of its real business
implications, the failure of CRM projects to deliver
the expected return on investment has left some
insurers dubious of expectations laid out by vendors.
According to a leading Italian non-life insurer, the
failure was likely due in large part to confusion over
what CRM could deliver. “I am afraid of speaking
about CRM. We are assuming CRM tools cannot
address all the points in a customer life cycle. You need
to have a CRM architecture across different informa-
tion systems, so it’s more than just tools. We have to
think about something that is more along the lines
of business process automation.”
The use of CRM does, in fact, hold significant prom-
ise for establishing a deeper customer relationship,
but it is clear that insurers must establish the frame-
work before they can use the tools. For the Italian
non-life insurer, establishing what they call a “par-
allel channel strategy” is the key to customer service
in the industry over the next five years. The only
expectation insurers should have, says the insurer, “is
that the channel between the insurer and the client
will not always be the same.” Therefore, enabling as
much interaction as possible between the various
channels is of utmost importance. It is essentially
placing the customer, rather than the channel, at
the center of an insurer’s customer service strategy.
This will be achieved by establishing a number of
other priorities for technology initiatives, such as
architecture, automation and data integration, that
enable “a greater global view of the customer.”
The need for a global view will be essential in the 21st
century. Insurers will increasingly need to have a full
understanding of their customers’ buying patterns
and evolving needs and provide more consultation on
a growing product portfolio. According to Genworth
CIO Scott McKay, there is “an entirely new opera-
ting environment being created for insurers, with
many not having the capabilities to service this new
landscape.The companies that do will be in an advan-
tageous competitive position.”
ING’s U.S. life insurance division is actively plan-
ning its Web strategy around the changing needs of
these customers—“certainly, servicing targets in the
upper-middle/upper class who are saving for retire-
ment is a priority,” says Catherine Smith, COO. The
key for ING is to enable the direct channel not for
sales, but for more streamlined access to account
information on an increasingly diverse and complex
product portfolio. Furthermore, ING Direct’s success
in online retail banking will be a model for greater
customer “intimacy” in insurance, including initia-
tives like “click-to-call” contact centers.
McKay is also keen on these automation technologies,
citing voice recognition as one that is enabling sig-
nificant efficiency and security in Genworth’s long-
term care applications. “This is an industry known
for telling people, ‘Let me send you the form.’ With
voice recognition software, I record that voice on the
phone and I attach it to the file, so that conversation
is an even better authentication than a signature. It
proves who they are and that you are performing the
task they asked you to. I think this technology has
been significantly underutilized in the industry.”
PROCESS
Currently, imaging and workflow technologies enable
the digitization of documents and, by extension, add
a degree of automation to business processes. Insurers
are introducing automation into routine tasks such
as simple auto claims, insurance policy changes, or
ratings/pricing adjustments in underwriting. The next
phase of automation, however, will be to enable true
straight-through processing in most insurance proc-
esses, at both the processing and analytical levels.

8. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
WHITE PAPER 7
environment. In the 21st century, legacy issues will
not demand nearly the attention or budget from
business managers that they do today.
Most of the leading insurers are already well along in
rationalization of their legacy operations, with the
most popular approach being the migration of func-
tionality to a middle tier. Aviva remains in an “attic
cleaning phase,” reducing the duplication and cost of
legacy where systems cannot be replaced. ING USFS
and ING Canada have largely tackled systems ration-
alization, the former dealing with the culmination of
several years of mergers and acquisitions activity, and
the latter doing so as part of the overall move to com-
mon platforms.
Although these efforts largely serve to reduce cost and
duplication from core systems operations, they stream-
line numerous processes and pave the way for much
greater functionality between old systems and new
applications. The ability to increase functionality
between disparate systems within a common platform
is the essence of enterprise architecture and serves to
execute on the centralized decision-making process.
Because the establishment of enterprise architecture
supports the very notion of IT/business strategy
alignment, it may be the most important long-term
technology investment an organization can make.
Although there are a number of technologies cur-
rently supporting the application of enterprise archi-
tecture, and several likely scenarios, executives see
enterprise architecture as practically synonymous with
SOA. The way SOA is spoken of these days gives it
the allure of a technology holy grail. One of our
respondents believes this will be the most signifi-
cant technology development in the next 10 years.
Despite the seemingly sudden interest in the indus-
try, the idea of SOA is not new, but the technologies
that enable it, such as Web services and open systems
development environments such as J2EE and .Net,
have recently made SOA a more realistic proposition.
The advent of business process management technol-
ogy is already having an impact on so many areas of
both manual and electronic workflow. The multi-
contact-point and labor-intensive claims-processing
function is the primary target of automation in non-
life operations. The Italian non-life insurer is making
a commitment to automation in this area, and
believes that the healthcare claims process will be
the next big opportunity for automation.
Perhaps because of the intensive process focus in the
insurance industry, automation was cited as a break-
through technology idea by several respondents.
According to several of our participants, the under-
writing process stands to reap early benefits from auto-
mation, given the reliance on actuarial models and
the classification of numerous types of data and the
manual processes still necessary for generating pricing/
rating tables. However, participants cautioned that
process must not be confused with enablement.
In order for automation to finally replace manual proc-
esses, the industry will have to move beyond simple
enabling technologies, such as imaging, that perform
some necessary functions but are not true automation.
“When I use imaging,” says Genworth’s McKay, “I am
in essence locked in to using electronic paper, causing
me to still have people sitting there analyzing every
piece of data coming in front of me. Contrast that
with getting 100 percent of my data into a system.
Now I can turn loose and use all kinds of digital deci-
sion engines, process simulation tools and unlock layer
upon layer of additional productivity and service lev-
els by being able to automate things.”
ENTERPRISE ARCHITECTURE
If the aim of the 21st century insurer is to be more
comprehensive in the collection of information, more
creative in its use and more nimble in its application,
it will need to establish a far more predictable IT

9. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
8 BEARINGPOINT
In the context of an SOA, these technologies enable an
unprecedented amount of flexibility within an organi-
zation’s operating environment, enabling heretofore
unprecedented speed, flexibility and efficiency.
The largest insurers have already embraced the idea
of Web services. The Italian non-life insurer sees SOA
as the true enabler of automation in processes and
data management because the entire enterprise will
be an open book. “Only with open architectures
will the business be made flexible enough to enable
more automation.” Aviva is beginning to implement
SOA across individual business units where appli-
cations, or services, are either available or easily
developed. Currently, these organizations are focus-
ing on transition, setting up common guidelines and
integration with existing lines. At the same time,
they are eliminating point-to-point connections in
favor of process management engines, considered an
important—though more tactical—component of
enterprise architecture. A large European non-life
insurer believes “the step before full SOA is to use
the message broker and business integrator—a type
of technology that allows this type of applications
communications.”
A U.S. life insurer said, “We think IT architecture
must be based on SOA and Web services to make the
business more flexible and enable more automation.”
The insurer of the 21st century will almost certainly
employ some form of enterprise architecture, likely
with elements of reference architecture, that will allow
more-dynamic, even real-time, decision making that
will be driven by events, such as market fluctuations.
INFORMATION
All tasks coming into the organization are directed,
monitored and managed in real time, and data is
stored and reused for underwriting, modeling and
compliance, either within the organization or in an
outsourced framework. Risk is integrated into the
day-to-day operations and fed back into the system
to develop more accurate modeling and pricing strat-
egies. In fact, a combination of greater government
oversight and distributed/grid computing may yet
shift the risk burden from underwriting to opera-
tions, including network security and consumer/
agent privacy.
The establishment of enterprise architecture means
that disparate business needs will be far easier to inte-
grate. However, the development of architecture is
but one piece of the technology puzzle for insurers.
Globalization of all economic activity will lead to a
continued rise in the severity and volatility of high-
impact risk exposures, while compliance requirements
will require regular and reliable reporting capabilities.
Furthermore, the underwriting process will be increas-
ingly fine-tuned to incorporate more precise risk factors
among insureds. All these pieces of data will need to
be stored, classified and callable for use in numerous
risk profiling operations.
Data management is essentially the collection and
proper use of knowledge. McKay believes that once
the governance and process focus are in place,
knowledge is the most important overarching factor
in success. “You have the strategic discipline and
incorporate a lot of knowledge of what you’re
doing, whether it’s technology knowledge or actu-
arial knowledge or risk management knowledge. All
of those areas come together to make these things
successful.”
The implementation and use of both structured
(defined and classified data, such as corporate policy
or financial results) and semistructured data (e-mails
and telephone conversations) will emerge as impera-
tive to realize the benefits of the feedback loop. The
key at this stage is moving data to a warehouse,
essentially a component, or service, within an archi-
tecture, from which it can be organized and extracted

10. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
WHITE PAPER 9
to meet business objectives, such as the pricing of a
new policy or product according to a risk profile in
a given growth demographic or the risk associated
with a certain asset class in a portfolio. These appli-
cations will be increasingly useful in the modeling
of catastrophe or terrorism risk. In this scenario, models
may be cross-referenced against corporate databases
to measure risk precisely across an entire group of
policyholders.
The visionaries are implementing technologies that
enable the processing of information. Distributed or
grid computing is already being used by a number
of large non-life insurers for risk modeling or catas-
trophe forecasting, allowing for much more precise
risk calculations. McKay says that Genworth, using
grid computing for risk analytics in comparing liabil-
ities in the asset portfolio, “has realized faster cycle
times and pricing runs, which has led to a measurable
competitive advantage.”
CHANNELS
Captive agents in the West will begin to disappear
in developing markets in the next five to 10 years, while
the growth of direct-to-customer sales via the Inter-
net and wireless will continue to fragment insurance
distribution. Increasing attention to customer serv-
ice will also require significant investment in non-
acquisitional information, as policyholders become
more directly involved with account management
and claims.
According to the survey respondents, the greatest dis-
tribution challenge for insurers over the next five to
10 years will be to provide competitively differenti-
ated access to information. A large European insurer
believes that because of the B2B2C nature of insurance
sales, it will be imperative for insurers to open their
back office to agents and policyholders alike. An insur-
ance company will essentially act as an information
network hub, with agents, banks and policyholders
as the spokes, able to initiate or respond to requests
independently. Third parties on both the sales (agents
and financial advisers) and service (fulfillment and
settlement operations) sides will also have access, as
claims increasingly become automated.
Many of the leading insurers we spoke with have had
agent portals up and running for several years as
part of their acquisition integration or captive agent
replacement strategies. A large U.S. property and
casualty company recently completed this project for
its agents in all 50 states and is now addressing an
updated Web access for customer information that
will allow them to obtain information on everything
from new products, to policy changes, to claims status.
The biggest challenge as we approach the end of the
decade, however, will be in China, where both life and
non-life insurance are still sold through company-
employed agents. Deregulation is providing an oppor-
tunity for Japanese, European and U.S. carriers to
enter the Chinese insurance market in novel ways. For
example, ING currently provides pension insurance
via an agreement with China Steel, filling a void left
by denationalization of Chinese industry. However,
the most popular method of entry into developing
markets is via other financial services channels, such
as banks. China’s largest insurers will find it difficult
to compete with foreign insurers in an increasingly
independent agent framework, according to China
Pacific Insurance Company’s Cheng. “Insurers will
have to improve their product design, internal con-
trol, and management and technology to compete
for, let alone maintain, market share.”
COMMUNICATIONS
Insurers remain concerned mainly with investments in
transforming core systems to improve operational
efficiency, considering the enthusiasm in the areas
of architecture and process automation. However,
advances in communications technology are giving

11. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
10 BEARINGPOINT
the insurers the ability to realize a host of new appli-
cations in everything from internal communications
to Voice over Internet Protocol (VoIP) to wireless.
According to a large European non-life carrier that has
implemented a VoIP initiative to strengthen the link
with its agents, “VoIP will happen. Having voice and
data on the same network enables more flexible com-
munication between employees and cost reduction.”
The Asian market is at the forefront of wireless
business communications, both for information shar-
ing and for transactions. According to China Pacific
Insurance Company’s Cheng, only enterprise archi-
tecture is a more important technology idea than
mobile in the emerging Chinese insurance market.
“Mobile is part of the Chinese culture, plus the infra-
structure is here. Everyone has cell phones and PDAs,
which will be the key information contact points with
the consumer. They can pay premiums or get policy
information or click to a call center for more help.”
The great advantage of mobile, according to Cheng,
is that the technology can be used anywhere, where-
as face-to-face contact and even computers cannot.
SOURCING
Insurers have long accepted outsourcing as a means
of leveraging economies of scale to lower costs. Claims
processing has been outsourced to third parties for
years, while the outsourcing of IT, including network
and call center management, is now commonplace
in global insurance. Recently, however, insurers have
begun to view outsourcing as more than a foundational
cost-cutting measure. The separation of IT manage-
ment from IT strategy is allowing carriers much
greater flexibility in moving other operations and
processing functions outside of the organization.
Zurich Financial Services is among the pioneers in this
area, having entered into a unique agreement that
separates functions within application development.
In order to meet rapidly changing demand curves and
run a pan-European business more efficiently, Zurich
decided to move the application development off-
shore where it could more easily scale production to
meet demand, thus increasing staff productivity while
realizing a significant cost savings. According to Chief
Information Technology Officer Michael Paravicini,
this agreement meant “getting access to the right
skills at the right price at the right time” in order to
speed time-to-market.
This desire for efficiency over cost savings suggests
a shift in thinking. Another large European insurer
is currently considering an application testing arrange-
ment that will integrate the development function
across geographies. However, there remains some
reluctance to outsourcing due to the complexity in
sharing intellectual property and the difficulty in
measuring service levels. Furthermore, many insurers
feel that sending too many jobs offshore could be
detrimental to customer relationships or organiza-
tional morale. A large U.S. life insurer said that, for
this reason, it seeks to keep many jobs, such as produ-
cers and dedicated service representatives, onshore.
However, it continues to look for opportunities to
send commoditized functions outside the organiza-
tion. This reflects the mixed feelings on outsourcing
and echoes the pros/cons argument surrounding out-
sourcing in the media—what goes and what stays?
Until recently, application development was consi-
dered a strategic insurance business function, whereas
call center outsourcing was a service-agnostic, labor-
arbitrage play. The contrary thinking among our
visionaries indicates that, while faith in outsourcing
agreements will increase, outsourcing itself will remain
an option, determined by strategic factors unique to
each organization.

12. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
CONCLUSION
With the global financial services industry at the
leading edge of a once-in-a-generation growth oppor-
tunity, leading insurers are showing how technology
may become a competitive sweet spot for true trans-
formational change. Re-engineering of core systems
will gradually give way to new priorities and mark
the end of a transitional period from the 20th to the
21st century.
The emergence of uniform IT/business strategy
promises to pay dividends in long-term, enterprise-
wide technology strategy—one that can address the
demands of agents and policyholders, more easily
adjust to risk and help firms adapt to and scale for
a rapidly changing global business environment.
However, to reap these rewards, insurance companies
must address several key issues:
Establish a clear, achievable vision that includes
measurable steps. Increasingly, corporate boards
and senior executives are requiring detailed business
cases for new IT initiatives, including the ability to
show that projects will generate a healthy return on
investment within very tight time frames. The trans-
formation plan cannot be a “big bang” approach.
CIOs must be able to articulate clearly—in tangi-
ble business terms—the scope of their vision, the
iterative steps that will be taken to get there and the
value that will be created along the way. As Genworth’s
McKay says, “I think the industry whines way too
much about legacy systems. The issue is not one of
legacy systems versus new technology. It’s about
IT organizations that strategically position their
platforms to evolve forward in stage execution, not
thinking somebody is going to suddenly bring you
a magic bullet and replace your legacy systems.”
Be realistic about what capabilities and resources
need to be in place.Management needs to understand
what types of competencies, skills and resources are
necessary to execute toward the vision. A company’s
planning processes must encompass the IT initia-
tives to make sure the organization is equipped to
carry them out.
Develop a culture of follow-through on a long-term
basis. How many times have companies launched
ambitious IT initiatives, only to abandon them “when
the going gets rough” or when the next major reor-
ganization weakens or eliminates executive support.
It is critical that senior management understands the
full price of failing to see projects to their conclusion.
Overcome organizational inertia. In many com-
panies, people act like antibodies when new and
unfamiliar technologies are introduced; they come
from all directions and try to eradicate it. If trans-
formational projects are to survive, senior executives
must provide strong, unwavering support. Commu-
nication must be clear and consistent from project
inception to completion. Education and training must
be thorough.
Learn to cut losses when necessary. Many insurers
have trouble shutting projects down midstream if they
realize that the initiative is out of alignment with
the broader vision. CIOs and senior executives need
to reevaluate their portfolio of projects continually
to make sure they are on track and that both near-
term and long-term objectives are being met.
Long-term, comprehensive IT strategies that include
enterprise architecture, process automation and cus-
tomer analytics will be essential to insurance com-
panies as they bridge the gap between the 20th and
21st centuries. Still, to realize the benefits of these
projects, industry leaders must first recognize their
limitations and properly understand their potential
impact on meeting business objectives.
WHITE PAPER 11

13. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
12 BEARINGPOINT
Encouragingly, technologies such as open source com-
puting and SOA are reaching the stage of maturity
at which they can contribute to project success.
Leveraging these technologies and staying the course
once momentum is gained, leading insurance com-
panies can, perhaps, be first in line to enjoy the sweet
taste of success as the new global opportunities unfold.
GLOBAL MANAGEMENT AND
TECHNOLOGY CONSULTING FOR
TODAY’S BUSINESS ENVIRONMENT
BearingPoint is a leading global management and
technology consulting company that serves the
Global 2000 and many of the world’s largest public
services organizations. Our experienced professionals
help organizations around the world set direction
to reach their goals and create enterprise value.
By aligning their business processes and informa-
tion systems, we help our clients gain competitive
leadership advantage—delivering results in an
accelerated time frame. To learn more, contact us at
1.866.BRNGPNT (+1.703.747.6748 from outside
the United States and Canada) or visit our Web site
at www.bearingpoint.com.
ABOUT THE AUTHORS
Marcel Nickler leads BearingPoint’s global insurance
segment and is based in Zurich, Switzerland. He has
been with BearingPoint since 2000, and his insur-
ance industry track record includes more than 20
years of experience in corporate strategy, IT/business
alignment, process re-engineering and technology
management. Marcel earned a university degree in
actuarial mathematics. For more information, con-
tact Marcel at +41 43 299 7310.
Edward Blomquist is a senior analyst with Data-
monitor’s Technology practice, where he specializes
in financial services technology. His work has been
cited in numerous industry and trade publications,
including A.M. Best; National Underwriters, Insurance
& Technology Magazine; and Banking Systems and
Technology Magazine.

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