Attacking Complexity in Insurance Products and Processes

A major European insurer with a multibrand strategy and many lines of business and products had tried for many years to implement a new core IT system for policy administration. Its efforts were stymied, however, by the complexity of its products and processes—resulting in multimillion euro IT write-offs. BCG helped the company take a holistic approach to complexity reduction that tackled both products and processes, enabling implementation of the new IT system and charting the path to future complexity reduction.

The company had no consistent technical framework for defining and managing its products in the old IT system. Moreover, its substantial number of special agreements with individual brokers and customers made it difficult to automate and generally simplify its processes. Service levels and processes also differed across its many product lines, leading to a heterogeneous customer experience.

BCG worked with the insurer to develop a simplified and marketable pilot home-insurance product—complete with a "click dummy" version to test the new product logic, which put customer needs at the center. We also defined measures, such as automated and simplified process elements for small claims, that would increase efficiency, and we created a unified product-mapping logic to develop products in the new IT system.

After successful completion of the pilot, BCG helped the company extend this approach and supported deployment across all P&C product categories. This included simplification and harmonization of product structures in all other product categories, migration planning, and digitization and simplification of processes across business areas as a basis for successful migration of all contracts and products to the new system.

Off to a Flying Start

With BCG's help, the insurer achieved significant progress in complexity reduction and created momentum for future efforts. Its success extended beyond products and processes to include testing of product-mapping logic for use by its IT system that is applicable to all its non-life-insurance products.

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