08/27/2024 | News release | Distributed by Public on 08/26/2024 22:01
New insurance start-ups, ranging from captives to commercial (re)insurers, typically coincide their launch with the renewal season for the P&C market, and many new life carriers also align with a January 1 approach. This can create a frenzy in the last quarter of the year to evaluate and select a range of service providers that will support the new carrier. As we approach Q4 2024, now is a great opportunity to discuss why a more thoughtful and measured approach to planning how a new insurance business will design, implement and sustain its future-state target operating model can ensure a smoother execution from the onset and transition from start-up to a thriving business.
Start-up (re)insurers often prioritize the acceleration of the licensing and incorporation process. Although writing business is certainly a top priority, it is equally important to conduct proper due diligence when evaluating vendors and service providers for mission-critical functions like investment accounting, middle-office operations, front-office analytics, regulatory reporting, risk management and performance measurement. These tasks may not be fundamental to writing business in those first months, but rushed decision-making, lack of planning and defaulting to the low-cost provider can become the source of longer-term problems such as:
Investing in a service provider who has the institutional-caliber people, processes and technology to act as an extension of your staff and operate as a true strategic partner-will absolutely improve efficiencies and scale, and save time and costs over the long term. With the rush of setting up operations while hiring and writing new business, some insurers might not allocate the proper time toward conducting a thorough and objective vendor evaluation process. In evaluating your service provider/strategic partner, here are some key considerations:
Conduct a proper RFP
It can sometimes be easier to rely on prior vendor experiences or relationships at the executive level in lieu of issuing a Request for Proposal (RFP) and engaging with an experienced third-party consultant to effectively manage the process. The result can be unintended lapses of missed requirements, reporting deliverables and opportunities for automated support for certain specialized asset classes that end up being caught during the implementation process; and at that point, it is too late.
Identify different stakeholders and their needs
Make sure to understand your stakeholders and the way they use data as well as the key accounting and reporting deadlines that must be met. These aspects are crucial to define the success criteria for both a successful implementation and for maintaining a reliable and consistent ongoing services relationship.
Know what you're looking for in a service provider
The optimal service provider should take a consultative approach to understanding the nuances of your investment portfolio, your strategic objectives for the future and recognizing industry pitfalls to avoid.
The right service provider should also have an intense focus on technology and an innovative mindset to solve complex issues. Technology should be used to:
With a highly automated cloud-based infrastructure and tightly integrated technology, insurers can be freed up to focus on higher-value tasks like growing their business, servicing their clients and investors, and other strategic initiatives.
Conclusion
In summary, do not discount the importance of partnering with the right technology and service provider as you plan to launch your new insurance business. There is no shortcut to success, and focusing too much on cost over quality can have unintended consequences that negatively impact your business and create impediments to growth. Having to continuously convert to new platforms and vendors due to issues with a lack of responsive support, data inaccuracy and missed deliverables can disrupt your business, create frustrated employees and can impact the experience for your clients and investors. Avoid the pitfalls of rushed vendor due diligence, and consider engaging SS&C Technologies to guide you on your next transformative journey. Explore our Singularity Co-Sourcing page to learn more.