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Competence centers for insurers

2011

IT-related functions are already widely consolidated in shared service centers

The survey shows that shared service and competence centers are an important lever for European insurance companies to improve their operating models. Particularly larger, globally acting insurers already consolidated various core and support functions. Today, especially IT-related functions are centralized and organized in shared service centers. Within the next three years, their percentage will increase from 61% to 89% of respondents for IT infrastructure and from 55% to 72% of respondents for IT application development and support.

According to the insurers' answers, organizing IT-related support functions in SSCs is expected to result in annual savings of more than 15% at a relatively low complexity level. Core functions, like reinsurance or asset management, are organized in shared competence centers by half of the European insurers. Besides these two functions, product development shows substantial potential for being centralized in a SCC. In the upcoming years, the consolidation level will be further enhanced. Thus, it is expected that European insurers will follow their US counterparts, which have already implemented modular organization models to a much larger extent.

Proximity to headquarters is among the major location decision criteria

In contrast to the general believe that shared service and competence centers are generally located in lower-labor-cost countries, the study clarifies that they usually reside close to the headquarters. According to the responding European insurers, such a proximity outdoes labor costs as a decision criterion. However, according to the respondents and project experience labor cost is still among the more important decision criteria.

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