Industry Impact—The Insurance Operations Value Chain

HfS is expanding its industry coverage in 2018 to include detailed IT and business process research on 11 core sectors, powered by extensive buyer research with Global 2000 firms. The transformation and challenges posed by digital disruption and changing competitive environments differ by industry. Subsequently, the solutions and services enterprises in different industries need to cope with change and to shape transformation journeys differ as well. Over the past few years, HfS has created in-depth industry research coverage that focuses on the rapidly changing needs of buyers and the ability of service providers to meet these needs with services built on domain expertise, industry talent, intellectual property, solutions that tackle sticky industry problems, and investments in industry-specific practices, startup ecosystems, and partnerships. We will build on this foundation in 2018, bringing expanded industry coverage, focused on key industry-specific processes and change agents, updated annually.  Our coverage sectors include:

Exhibit 1: HfS Industry Coverage 2018

Source: HfS Research, 2018

In order to give you a taste of what to expect for research in the Insurance sector, this Point of View report previews our insurance-specific value chain and the in-scope processes and change agents we’ll be examining throughout 2018. We will release insurance-focused Blueprint Spotlight reports in Q2 on business process services and in Q3 on IT services; these will be supplemented by periodic voice of the customer case studies, point of view analyses on change agents, and buy-side research. For more insight into our master research agenda for 2018, please refer to our  report on planned blueprint research.

The Insurance Operations Value Chain

HfS developed the industry value chain concept to graphically depict our understanding of the processes and functions that specific industries engage in to operate their businesses. To truly understand the services needs of an industry, you must understand its industry-specific and horizontal processes and the relevant change agents enabling transformation. 

The industry value chain for insurance operations provides a comprehensive overview of services for the insurance industry focused on property and casualty (P&C) and life and annuity (L&A) segments. We’ll be including these insurance sub-sector elements in our Global 2000 survey research this year, which will help us gain a more granular understanding of buyer behavior.

Insurance Industry-Specific Processes

The insurance value chain includes the following industry-specific processes:

• Actuarial and new product development—Services focused on optimizing actuarial functions and developing new insurance products and services;
  
  
• New business—Processes focused on the development of new business opportunities including sales, marketing, and analytics for P&C and L&A segments;
  
  
• Distribution channel management—Processes focused on the development and management of insurance channel networks;
  
  
• Policy serving—Various services designed to support policyholders throughout the lifecycle of insurance coverage;
  
  
• Claims administration—Processes focused on supporting and optimizing the claims life cycle inclusive of processing, billing, and analytics.
  
  

Our research will evaluate the depth and breadth of service providers offering insurance-specific services in these categories and the impact of critical change agents such as Internet of Things (IoT) and intelligent automation. The majority of our research will focus on how technology and business operations are evolving to address a range of challenges and business outcomes for carriers across the insurance services value chain (see Exhibit 2). For example, reducing the total cost to serve while maintaining quality is the primary focus area for L&A carriers when servicing customers for closed block operations.

Exhibit 2: Key Carrier Concerns And Business Outcomes Sought Across the Services Value Chain

Source: HfS Research, 2018

Horizontal IT and Business Processes

Enterprises in all sectors have a range of consistent business and IT processes that are essential to running their businesses but are executed similarly regardless of industry. We refer to these as horizontal processes and have segmented them by IT and business functions as outlined in Exhibit 3. Horizontal business processes include elements such as customer engagement and HR. IT processes include functions such as application development and maintenance and infrastructure management. Our industry-specific coverage of these areas will focus on instances where something unique has been developed for the Insurance industry, such as cloud-based life and annuity BPaaS offerings, telematics-based product development, specialized cognitive agents, or drone-based claims investigations. In addition to industry coverage of these horizontal topics, they will also be well covered as part of our functional research dimension.

Enabling Technologies

Lastly, but of vast importance, we have included a value chain section dedicated to enabling technologies, depicted in Exhibit 3. As the traditional insurance sector continues to be disrupted with revenue and profit experiencing anemic growth at best, these change agents help in optimizing critical operations and even enabling new revenue streams. They include elements such as intelligent automation, IoT, and smart analytics. We view them as horizontal as they can be used across insurance enterprises and leveraged for both horizontal and industry-specific processes. Our research on these topics will focus on how they are being utilized within insurance firms, which service providers are bringing them to the table, and what real business impact is being realized.

Exhibit 3: The Insurance Business Operations Value Chain

Source: HfS Research, 2018

Bottom Line: Enhanced Insurance Research to Help Make an Impact

As we dive into 2018, HfS’ enhanced research coverage of major business operations trends by industry will help identify and articulate business impact in motion. Our coverage of the insurance sector will examine core value chain processes across industry-specific and horizontal functions with an emphasis on the impact of critical change agents.