Life and pension companies could save up to 1bn a year by consolidating the number of administration platforms they run, according to research from consultancy Accenture.
It surveyed the 16 biggest life and pension firms in the UK among a worldwide survey of 112 providers and found they could make average savings of around 50m a year, with the biggest firms potentially saving 150m.
Senior executive of the insurance practice Jason Whyte says consolidation would improve the service standards to IFAs and offer a quicker time to market for new products.
Providers have been reluctant to address the issue due to having to justify the upfront costs but Whyte says the research shows these could be recouped in two years.
He says the average number of platforms is around 15 per provider but it is not unusual for a firm to have up to 40 due to previous mergers and different products being developed on separate platforms.
He says platform consolidation would put firms in a stronger position with regard to potential mergers and acquisitions and they would be better placed to respond to the outcomes of the FSA’s retail distribution review.
Whyte says: “This is the first time it has been shown how great the potential benefits are for firms consolidating their sometimes huge number of platforms. Insurers, advisers and consumers would benefit greatly from such a strategy. It will be harder now for providers to justify dragging their feet.”