RESEARCH REPORT REVEALS ABOLITION OF POLARISATION RULES WILL SIGNIFICANTLY IMPACT IT STRATEGY OF UK INSURERS

Over 70 % of UK life and pensions insurers expect that the Financial Services Authority’s (FSA) abolition of polarisation rules will create considerable challenges and change for their businesses, reveals a further analysis of a major new research report. 72% of insurers believe that changes to disclosure and depolarisation will result in the need to revise existing software, with half of these declaring that it will generate additional software requirements. Around four out of ten insurance companies expect the latest legislative changes to impact their businesses within six months.

The research, titled Issues Affecting IT Deployment in the UK Insurance Sector and commissioned by leading IT services provider CGI Group Europe Ltd, was carried out in March 2002 by independent research company, Metrica. One hundred major UK-based general and life & pension companies were interviewed both by telephone and extensively face to face.

Paul Thornton, business solutions manager, CGI Group Europe, comments on the research: “The abolition of polarisation rules will bring a complete overhaul in the way life and pension products are sold and distributed in the UK. This includes methods of distribution, remuneration of advisers, cost of advice to consumers, as well as disclosure rules. It is surprising that the figures are not higher, but we believe this is indicative of a lack of clarity about what exactly the FSA’s proposals will entail.”

Thornton continues, “The research highlights that the integration of multiple providers will have a significant impact across the range of front and back office functions. However, it would be a huge oversight for product providers to view the changes simply in terms of a technological challenge. It is also about amalgamating multiple providers' business processes into one coherent sales and service model. Once this challenge has been understood, insurers can then begin to effectively integrate and revise their software.”

Thornton adds, “Given the relatively short timescales of regulatory change, any organisation not planning for depolarisation now is taking a significant risk. Worryingly, the research highlights that six out of ten insurers expect changes to take effect between six and 24 months from now which suggests that they are still in the initial planning stages for coping with the effects of depolarisation.”

Gavin Chapman, managing director at CGI Group Europe Ltd, comments on the survey, “Interestingly, the research points to the fact that 56% of life and pension providers envisage having additional software requirements as a result of regulatory changes. CGI believes that a significant proportion of this figure relates to those providers considering the creation of their own e-business portals, enabling them to interact with their various business partners. Currently, the industry relies upon a handful of independent portals, which provide a complete industry-wide view. However, these portals incur costs for both product providers and brokers. Providers considering multi-tie status now can see the tangible benefits of cutting their ties with the independent portals and developing a custom made solution for their exclusive and particular business requirements. Not only does this eradicate reliance upon third parties to bring about their individual objectives, but, importantly, also reduces long term costs."

Copies of the research report, Issues Affecting IT Deployment in the UK Insurance Sector, can be obtained by contacting Vicki Bower on 01438 791596.

About CGI
Founded in 1976, CGI is the fourth largest independent information technology services firm in North America, based on its headcount of 13,700 professionals. CGI’s annualized revenue run-rate totals CDN$2.1 billion (US$1.3 billion). CGI’s order backlog currently totals CDN$10.7 billion (US$6.7 billion). CGI provides end-to-end IT services and business solutions to more than 3,000 clients worldwide from more than 60 offices. CGI’s shares are listed on the TSX (GIB.A) and the NYSE (GIB). They are included in the TSX 100 Composite Index as well as the S&P/TSX Canadian Information Technology and Canadian MidCap Indices. Website: www.cgi.com.

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