Leaving legacy systems behind
15 Nov 2017
Tower says it aims to leave its larger rivals with 'clunky legacy systems' in its wake by transforming into a "digital challenger" offering customers more tailored products that draw on deeper pools of information.
The Auckland-based insurer is raising $70.8 million to bolster its balance sheet and has adopted an ultra-conservative approach to the most problematic claims lingering from the Canterbury earthquakes seven years ago.
Chief executive Richard Harding says that gives it the headroom to overhaul its IT infrastructure and embark a new way of doing business which will deliver better products for customers, tailored to their specific needs and priced accordingly.
Tower has hired EIS Group to scope out and cost the process of integrating four systems into one core infrastructure as part of a wider programme to simplify the business, putting the insurer on the front foot against its rivals which are carrying more cumbersome systems that struggle to keep up with changing consumer demands.
"It's that flexibility to use data from all sources, get that data compiled in a way for you as a customer that we actually have insights about you so we can make a compelling price for you," Harding told BusinessDesk in an interview.
"It's really about turning around insurance to be simple and easy for customers.
"We won't get to that in financial year '20 but we've certainly built the foundations that will enable Tower to have the flexibility to deliver that sort of claims outcome or customer experience," he said.
Harding doesn't anticipate the country's larger insurers can match that strategy, because "they're not as nimble and they don't have that ability and flexibility."
Tower's online drive has already started paying dividends, with yesterday's announcement of the capital raise and lingering issues with Canterbury claims clouding a robust underlying business.
The firm's online sales generated 30 per cent of new business for the insurer in the September quarter coming through digital channels, compared to just 9 per cent in the March quarter of 2016.
Still, the insurer booked $19.6m of impairment charges on software in the 2016 financial year after finding its current systems restricted its ambitions and accelerated the amortisation charge on internally developed software in 2017.
- NZ Herald