That’s how I think about supplier management. To cope with pandemic restrictions, inflationary costs, and simple availability issues, insurance companies have been broadening their supplier pool. If your current suppliers can’t deliver, you find another one that can. Seems straightforward, right?

But adding new suppliers increases the complexity of managing your vendor base. A larger, more diverse pool of vendors makes it more difficult to gain visibility into the performance of any one provider – or all of them.

For many companies, adding more suppliers makes planning more inconsistent. It can also complicate their ability to mitigate supplier risk and compliance.

Supplier Performance Is Undermanaged

When I talk to insurance industry executives, the outcome is clear: too many companies still struggle to adequately manage vendor performance.

In a recent , nearly half of respondents say that gaining visibility into vendor performance is challenging. Even though 67% say they use procurement technology for supplier management, 41% continue to experience supplier performance issues.

And that might be an understatement. In the same survey, 39% of insurance executives say that most procurement processes are still manual. That tells me that many insurers may not be fully aware of their vendor performance issues.

Digital Solutions Elevate the Role of Supplier Management

What should insurance companies do to overcome these challenges? It’s time to move beyond manual procurement and embrace innovative new technologies.

A comprehensive vendor management program, supported by digital technology, can help you determine how good your vendors really are. By identifying shortfalls and collaborating to improve outcomes, you can get more service and value from each supplier.

can help you monitor and analyze vendors’ reliability, quality, and performance. By embracing these technologies, you can gain real-time insight into supplier performance. In an economy where everything changes by the minute, this insight can help you improve control and increase your competitive advantage.

Manage Vendor Performance with Digital Business Networks

One of the most popular ways to modernize vendor management is to use a digital business network. By connecting insurance companies with a multitude of vendors, large networks simplify the adoption of modern vendor management strategies.

let you access a diverse collection of new suppliers with the click of a mouse. You can streamline order requests and fulfillment while simplifying collaboration between insurers and vendors.

Procurement decision-makers gain new insights into delivery times, product and service quality, costs, and service-level agreement compliance. The data helps identify performance gaps and identify cost savings opportunities.

You can manage more vendor relationships at the same time throughout their engagement. And when problems arise, you can quickly pivot to another vendor that can meet your needs.

Improve Business Outcomes by Digitalizing Procurement

Digital business networks and other technologies deliver quantifiable value. In the , 60% of respondents that have embraced digital transformation say they improved supplier collaboration. Nearly as many, 57%, report enhanced supplier performance management.

In a difficult economy such as this one, those benefits can make the difference between lackluster performance and real competitive success. By working with reliable suppliers that deliver what you need when you need it, you can give customers a more engaging, satisfying experience.

And because happier customers generally lead to a better bottom line, digital business networks sound like the best solution to pop up in a long time.

Explore the .

Toni Tomic is global head of Insurance at SAP.

However, insurance companies that rely on this staffing approach find that the external workforce becomes a huge part of overall spend. Often, they overlook tools to help manage this workforce.

In fact, a recent found that insurance companies now spend 40% of their workforce budget on external labor. And nearly three-quarters of companies say that these workers are important to their ability to meet market demand or operate at full capacity.

The external workforce is a key lever in enabling business performance. It is important to meet market demands, improve the customer experience, and reduce risk. With these facts in mind, it’s easy to see why managing the external workforce should be a priority.

Increase Insight into Your External Workforce

Companies often use traditional procure-to-pay systems to help streamline external workforce management. Yet many insurance companies still don’t have the insight they need to get top value from their spend.

For example, found that just 34% of companies use procurement technology for contingent workforce management. Some of the respondents use this technology to manage their service providers, but only 20% were able to track and manage their engagement from statement of work to purchase order to invoicing.

Companies also lack insight into fundamental issues such as who is doing the work, the contract terms of each engagement, and the responsibilities of each worker. The challenge is that digital security breaches present risks to the organization, as external workers can take advantage of their digital access if they are not onboarded and offboarded properly.

The research highlighted several other issues that can compromise the value of the external workforce. Nearly half of respondents reported compliance issues and more than 40% reported quality issues regarding resources and projects with external workers. In addition, 44% reported unauthorized spend with contingent workers.

Standardize and Streamline External Workforce Management

What’s the best way for insurance companies to manage each external workforce engagement so that they get the value they pay for – and the best possible business results?

Advanced digital solutions for external workforce management can help.

With these solutions, managers can standardize worker onboarding and offboarding processes. They can quickly and intuitively grant access to systems and assets – and disconnect that access when a worker’s contract expires. And the technology helps ensure that workers have the right certifications. This is a great way to reduce risk.

Best-in-class solutions let you use any type of proof of service – such as timesheets, milestones, and deliverables – on a recurring due date or price-per-unit basis. This feature helps you align payment with the value provided.

You can tailor workflows based on category of service or work provided. For example, you might want to include tiered vendors in the requisition process or require approvals needed for invoicing to ensure your company’s organizational guidelines can be easily followed.

Increase Bottom-Line Business Value

Other features let you monitor supplier KPIs, such as response time, cycle time, and hire rates. With this insight, you can facilitate reviews and negotiations with suppliers.

Improving your external workforce management processes can also help you provide a better experience for candidates and workers. Intuitive workforce management solutions can make your company more attractive to younger workers who prefer to interact with you using digital technologies. They allow you to manage who is working for you, where workers are located, what they are doing, how much you are paying them, and what access they have to your systems and facilities.

What’s more, the right procurement technology can help you generate significant cost savings. Modern tools generate reports that enable immediate visibility into contingent workforce and services procurement spend. Analytics features can help you identify opportunities to further operationalize your procurement processes and create new cost efficiencies.

You’ve developed a valuable external workforce. Now, advanced technologies can help it boost your business’ bottom line.

Toni Tomic is global head of Insurance at SAP.

Whether it’s from consumer activism, tighter government regulations, or the need for improved operational resiliency in the face of climate change, companies are taking major strides towards sustainable business models. As , incorporating sustainability into core business strategies is about more than “doing good” – it’s a smart business strategy. Capital markets are evaluating performance against environmental, social, and governance (ESG) criteria in investment decisions. Companies that fail to consider ESG criteria are at a disadvantage. In fact,  will revise their investments if companies do not consider ESG criteria within their business model.

Sustainability Trends in the Insurance Industry

The United Nations Environment Programme Finance Initiative (UNEP FI) has been launched as a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development. UNEP FI works with more than 450 banks, insurers, and investors and over 100 supporting institutions to help create a financial sector that serves people and the planet while delivering positive impacts.

Regulators are also requiring sustainability reporting from insurers, and they expect financial flows will be adjusted towards ESG criteria, in accordance with the 2015 Paris Climate Conference. The EU Taxonomy Regulation will require most European financial institutions to outline the environmental sustainability of their economic activities. But the  is not just about ESG criteria, although that’s certainly an important factor. Risks associated with climate change, such as more extreme weather, are also top of mind for insurers.

Global natural disaster insured losses, the amount insurers are forecast to pay out, is estimated to be as high as US$42 billion for the first half of 2021, according to a . From the Texas polar vortex to the Canadian heat wave to the extreme flooding in Germany, extreme weather events are costing insurers more than ever – and these climate-related risks are only expected to increase. More than half of U.S. regulators indicate that climate change is likely to have a “high impact or an extremely high impact” on coverage availability and underwriting assumptions, according to the “Insurance Regulator State of Climate Risks Survey” conducted by the .

Gone are the days when sustainability was a footnote on an insurance company’s annual report. Today, stakeholders are pushing for change and demanding accountability. Customer preference is driving a shift towards more sustainable products and services. A variety of carrier options in a competitive marketplace means that customers are comfortable walking away from companies that don’t follow sustainable practices. Millennials and Gen Z ­are . This is the same group insurers are competing to earn loyalty from to build long-term customer relationships.

The same goes for hiring top talent. In a tight talent market, professionals can afford to be selective about where they work and increasingly opt for companies that align with their values. Improving ESG performance is key to attracting and retaining Millennial and Gen Z employees.

Linking Sustainability with Business Activity for Environmental, Social, and Economic Impact

Enterprise solutions from 51·çÁ÷deliver company-wide functionality and industry-specific features designed to help businesses achieve sustainability at scale. :

• Climate change solutions: Lower a business’s environmental impact by minimizing the carbon footprint associated with products and operations.
• Sustainability and ESG reporting solutions: Connect environmental, social, and financial data holistically to steer businesses toward smarter decision-making.
• Circular economy solutions: Move to circular processes across a business’s entire supply and value chain.
• Social responsibility solutions: Enable equality and social equity across a business’s entire workforce and network.

Toni Tomic is global head of Insurance at SAP.

For Northern Trust, the answer to this question is a resounding “yes,” thanks in part to the strong relationship the company has built with 51·çÁ÷to deliver innovative, scalable systems and business-driven content and services.

Northern Trust: Market-Leading Approach to Financial Asset Solutions for Insurance Companies

Named the “Best Custodian” by Private Equity Wire in 2020, Northern Trust serves more than 180 insurance clients worldwide with more than US$1 trillion in assets. The company has been providing financial management solutions to insurance companies for more than 90 years.

Seven years ago, Northern Trust identified the need for an outsourced investment accounting solution in the marketplace that was robust, scalable, and flexible. In the current low interest environment, insurance companies have had to be creative in how they trade and what they trade. Real-time insight across the entire portfolio is critical to business success. Yet Northern Trust’s clients were struggling to have all their assets on a single platform and instead relied on a patchwork of disparate solutions. Others were going through the process of bringing their derivatives in to see a consolidated view of their true holdings and were struggling to understand their accounting.

Northern Trust sought a cloud-based, agnostic platform that would allow clients to customize their ledgers, support every type of trading option, allow management of all asset classes from privates to derivatives, and accurately represent their position. The right digital solution would need to solve the challenges caused by extracting accounting data, working with data across the globe, and integrating multiple data platforms – all while providing data in real-time.

51·çÁ÷Financial Asset Management works to meet these needs and more, providing a one-of-a-kind investment accounting and analytics services application that marries technology and service. Northern Trust considers the application to be the ironclad calculation engine for everything that happens for its clients’ portfolios. By adding the cloud-based engine for investment accounting and analytics, this gives Northern Trust’s clients the ability to truly “interrogate their data” rather than cobbling together Excel files and PDF files.

51·çÁ÷and Northern Trust: Innovation for Insurance Accounting and Analytics

Northern Trust started as an 51·çÁ÷customer, operating 51·çÁ÷Financial Asset Management for more than five years before expanding the relationship to help innovate its current business model. Together, the companies work to provide both the market-leading investment accounting platform and robust services. 51·çÁ÷provides the sustainable, scalable application; Northern Trust’s Investment Accounting & Analytics Service operates on top of 51·çÁ÷Financial Asset Management, providing functional, business-driven content and services to joint customers. It’s a unique relationship that enables exceptional solutions and services to benefit customers that otherwise would not be possible.

Working together, 51·çÁ÷and Northern Trust offer numerous advantages to insurers, including helping to ensure compliance with statuary reporting for all 50 states and accounting for several bases in parallel, such as US-GAAP and IFRS. The two companies also work to unburden insurers from having to maintain institutional investment management expertise in-house. With Northern Trust’s leadership, insurers can be confident they’re current on rapidly evolving best practices.

Podcast: Learn What’s Next from the Experts

By 2025, many insurers will be engaging with cross-industry ecosystem providers and defining opportunities beyond managing risk. Solutions like 51·çÁ÷and Northern Trust’s platform and services are essential to help insurers with automation and real-time data insights to embrace the future.

Toni Tomic is global head of Insurance at SAP.

Now, this transformation is rewriting the rules for customer experience (CX) in the insurance industry. In the highly competitive industry, delivering best-in-class customer experiences can be a critical differentiator. Combining operational data (O-data) with experience data (X-data) provides the insights that enhance the customer experience offerings and give insurers a competitive edge.

CX Imperative: Why the Insurance Industry Lags Behind

Customers typically have few – if any – interactions with their insurance company. In fact, without a claim or policy change, there is often no interaction at all. This means when an interaction does occur, it takes on a greater level of importance. Furthering this challenge, consumers are becoming more discerning and less forgiving. One in three customers will walk away from a brand they love after just a single bad experience, .

How can insurers get a broader picture of the customer journey? The first stop is O-data, which reveals the what. Policy renewal rates are decreasing, attrition rates are increasing, new customer acquisitions are decreasing. This data tells us the insurance company has a problem, but we don’t know why the problem exists.

This is where X-data comes into play, revealing customer pain points — a difficult claims process, a poor digital experience, a slow reimbursement process — that are causing the problem. Together, this data can help insurers uncover the causes of customer churn and identify actions to best address pain points, such as automating the claims process, reducing call wait times, or optimizing digital channels for claims submission.

Combining O-data and X-data makes it easier for insurers to unlock powerful business outcomes and:

• Improve the claims process, reducing attrition and increasing renewal and revenue
• Deliver a superior digital experience, increasing revenue and acquisitions
• Strengthen insurer-broker relationships, increasing policy renewals, revenue, and acquisitions

Bringing X- and O-Data Together for True Insight

three components critical to customer experience in the insurance industry: effectiveness, ease, and emotion. These components are critical to building a strong customer relationship, shoring up existing market share, and capitalizing on new business opportunities. And they are best assessed through a combination of X- and O-data.

Consider what happens when a customer files an insurance claim. This process can be emotional: Property may have been lost or damaged and a customer’s day-to-day life is directly impacted. O-data tells us about how the claims process is handled while X-data tells us what the customer feels about the claims process.

The X- and O-data from these interactions must be part of a customer’s profile. No matter with whom a customer is speaking, this agent or representative is empowered with the background knowledge they need to be as responsive as possible to a customer’s concern. When insurers have these insights at their fingertips, agents and other front-line employees can provide a better experience, improving engagement and strengthening customer loyalty. These exceptional experiences turn loyal customers into brand advocates, giving insurers a critical competitive edge.

Turning Insights into Business Success

Here’s how three companies put the power of X and O to work for them.

Allianz: Predictive Power of Democratized Insights
is one of the world’s largest insurance providers, but despite being a market leader, the company recognized it was operating in a market with excess supply and declining rates. Rather than staying the course and risk falling profits and market share loss, Allianz proactively put customer experience at the heart of its strategy to earn lifelong loyalty from clients who see them as an integral, forward-thinking business partner. Working with Experience Management solutions from 51·çÁ÷(Qualtrics), they collected experience data from customers in 22 countries and 16 languages. The company now has a wealth of insights, filtering and prioritizing based on location and function. These insights have led to new products, such as protecting customers from risks like cyber crime; new approaches, such as elevating claims processing from back-office to client-facing function; and new reputation management strategies, such as above-and-beyond consultations.

MetLife: Boosting Brand Engagement
MetLife, Inc. is a leading global provider of insurance, annuities, and employee benefit programs. The company is digging deeper into its data for actionable insights that drive brand engagement. For example, in a recent MetLife-sponsored Earth Week contest, participants needed to answer a series of questions to be eligible for a gift card. From the reporting, MetLife was able to determine three winners and the process sparked significant brand engagement.

SwissRe: End-to-End Customer Experience Ownership
merged all its customer experience, voice of customer, and market data from more than 11,000 clients, 25 markets, and 11 languages onto a single, secure platform. The company now has a Web-based, highly secure insights platform that gives users 24/7 access to data. The intuitive interface makes it easy for all stakeholders to become experts on customer experience. This centralized, in-house approach led to a 90 percent decrease in research costs, a five-times increase in speed and productivity, and a seven-point Net Promoter Score increase.

Next Steps: Enhancing CX with Data-Driven Insights

Experience matters. We live in a world where insurers are disproportionately rewarded when they deliver a great experience and punished when they do not. Experience Management solutions from 51·çÁ÷unlock the power of business operations data (O-data) with experience data (X-data) to transform customer experience and drive business success.

As part of the 51·çÁ÷C/4HANA suite, 51·çÁ÷now makes it easier for insurers to combine X- and O-data and gain actionable insights at every step of the customer journey. .

Toni Tomic is global vice president of Insurance at SAP.