NZX-listed insurance company Tower is aiming to become a digital challenger brand through a $33 million transformation investment, including a new IT platform.
In reporting its half-year results, Tower emphasised transformation, driven in part by a $24 million investment in a new IT platform from EIS Group, as the key to future business growth.
"The key to accelerating Tower’s transformation is a new IT platform that enables the simplification of products and processes," Tower told investors. "This will remove complexity for frontline teams and enable the delivery of a unique and revolutionary customer experience."
In addition to the $24 million platform, Tower will spend a further $6 million on related transformation projects for digital integration and online service, while $3.5 million more will be invested in operational improvements and new customer communications capabilities.
Tower said it is aiming to move half of all transactions online, removing complexity and delivering cost and productivity gains in processing low value transactions.
"With Tower’s Board having approved investment in a new IT platform, work is now underway to deliver on a programme of work that will accelerate momentum and enable Tower to rapidly respond in today’s constantly changing digital landscape," the company said.
"Tower will be able to combine existing data with that of partners to increase market share by actively targeting niche customer segments with compelling and appropriately priced propositions."
Technology has been a bug-bear for Tower in recent years. In 2016, the business wrote down the value of its software investment by $19.6 million.
Tower said at the time that it was operating on multiple systems that lacked flexibility and were hard for staff to navigate. The company appears well aware of the need to manage re-platforming risk.
"A significant amount of work has already been completed to ensure that this programme of work will deliver benefits, create no future legacy issues and avoid the pitfalls that many other organisations face when replacing their core IT platform," Tower told shareholders.
"A robust governance approach and clear roadmap forward will enable Tower to commence selling new business on the new platform in the first half of the 2019 calendar year. Once new business is live, migration of the existing book can start."
Other benefits expected from the new IT platform include the ability to create and deliver a unique customer experience, quickly deliver simple, customer focused products and to target specific, profitable customer segments through granular, automated pricing and underwriting.
Furthermore, it should also enable Tower to charge fairer and more accurate premiums through improved access to, and use of, internal and external data and to rationalise products and reduce claims costs by improving claims management.
Tower said strong growth in gross written premium, policy numbers and digital sales were evidence that its transformation was already well underway.
While improvements in key metrics were achieved, it told shareholders, severe and unprecedented weather and the settlement of a dispute resulted in a half year loss of $11.6 million for the period ended 31 March.
“With investment being made in a new IT platform, our focus is now on accelerating the positive momentum we’ve generated and leveraging the powerful platform we are building for further growth,” Tower CEO Richard Harding added.