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.
– 30 –
For more information:
UK PRESS ENQUIRIES:
Geraldine Grewal / Lisa Carter/ Louisa Constable
Portfolio Communications Ltd.
Tel: 020 7240 6959
E-mail: geraldine.grewal@portmet.co.uk
