Background
In a competitive, slow growth environment, management of costs
is an imperative for life insurers. With legacy book business often
representing up to half the costs on insurers total book, effective
management of the legacy book must be addressed as part of any
overall cost management programme. However, the complexity of the
legacy book environment, built up over many years, frequently means
an incremental approach to reducing legacy book costs tends not to
be effective. More substantial solutions involving outsourcing and
separating the legacy book from the open book, are usually
required. But such an approach is difficult for companies to
evaluate and execute because it is outside most normal management
experience. Taking a rigorous, disciplined approach to defining the
options, the preferred solution and transition activities is
critical.
