Business Capability Mapping for P&C Insurers

1. Capabilities Blueprint for the P&C Insurance www.capstera.com 1

2. Map Your Future: Transforming P&C Insurance Through Strategic Capability Design. In the rapidly evolving Property and Casualty (P&C) insurance ▪ landscape, carriers face mounting pressure to respond to market disruptions, regulatory changes, and shifting customer expectations. The fundamental challenge lies in prioritizing transformation efforts to deliver maximum business value while maintaining operational stability. A Business Capability Map provides the foundation for ▪ strategic decision-making by creating a comprehensive view of what your organization does—independent of how it operates today. This structured approach allows P&C carriers to align technology investments with business priorities, identify capability gaps, and create a roadmap for digital transformation that drives measurable outcomes. www.capstera.com 2 2

3. The Power of Business Capability Mapping 1 Business capability mapping creates a stable, business-focused view of the organization that serves as the foundation for strategic planning and transformation. Unlike processes that change frequently, capabilities provide an enduring framework for decision-making. ▪ Strategic Alignment: A capability map connects corporate strategy to execution by identifying which capabilities require investment to achieve business objectives. ▪ Transformation Focus: Heat mapping capabilities based on strategic importance, performance, and risk helps prioritize improvement initiatives and technology investments. ▪ Common Language: The capability map establishes shared terminology across business and technology teams, breaking down silos and improving collaboration. ▪ Portfolio Management: Mapping applications and projects to capabilities highlights redundancies, gaps, and opportunities for rationalization. ▪ Organizational Clarity: Capability ownership definitions create clear accountability for performance and outcomes across the enterprise. www.capstera.com 3

4. The Anatomy of a P&C Capability Map 2 A comprehensive P&C business capability map has a hierarchical structure that provides both breadth and depth in representing what the organization does to fulfill its mission. ▪ Level 1 Domains: Typically organized into 8-12 major domains such as Product Management, Underwriting, Claims, Distribution, Customer Management, and Enterprise Functions. ▪ Level 2 Capabilities: Each domain breaks down into 5-15 distinct capabilities representing the major functions within that domain. ▪ Level 3 Sub-capabilities: Further decomposition of Level 2 capabilities into specific business functions with defined outcomes, typically 5-10 per Level 2 capability. ▪ Level 4 Activities: The most granular level, detailing specific activities that may align with process steps in operational documentation. ▪ Capability Attributes: Each capability includes definitions, performance metrics, ownership, strategic importance, and other relevant attributes. www.capstera.com 4

5. Starting Your Capability Mapping Journey 3 Launching a successful capability mapping initiative requires careful planning, executive support, and a pragmatic approach focused on business outcomes rather than architectural perfection. ▪ Executive Sponsorship: Secure support from business leaders by connecting capability mapping to strategic priorities and pain points. ▪ Scope Definition: Start with a focused scope covering one or two critical domains rather than attempting to map the entire enterprise at once. ▪ Team Assembly: Build a cross-functional team combining business domain experts, enterprise architects, and strategic planners. ▪ Methodology Selection: Choose a capability mapping approach that balances rigor with usability and can evolve over time. ▪ Success Metrics: Define clear measures of success for the capability mapping initiative itself, focusing on business outcomes rather than documentation completeness. www.capstera.com 5

6. Developing Your P&C Capability Map 4 The development process for a P&C business capability map combines industry best practices with organization-specific requirements to create a comprehensive yet practical model. ▪ Reference Model Research: Review industry reference models from organizations like ACORD, APQC, and Business Architecture Guild to accelerate development. ▪ Top-down Approach: Begin with Level 1 domains and Level 2 capabilities based on industry standards and your organization's business model. ▪ Bottom-up Validation: Validate the model through interviews with business domain experts to ensure completeness and accuracy. ▪ Naming Conventions: Establish clear naming standards using business language rather than technical or organizational terms. ▪ Iterative Refinement: Develop the model iteratively, focusing initially on breadth at Levels 1-2 before diving into deeper levels in priority areas. www.capstera.com 6

7. Did You Know According to Gartner, organizations that use capability- ▪ based planning are 76% more likely to achieve their strategic objectives compared to those using traditional project-based approaches. www.capstera.com 7

8. P&C Insurance Core Capabilities 5 The core insurance capabilities represent the primary value chain activities that differentiate P&C carriers in the marketplace and directly impact customer experience and financial outcomes. ▪ Product Management: Capabilities for designing, pricing, and managing insurance products throughout their lifecycle, including rate filing and compliance. ▪ Underwriting: Functions for evaluating, pricing, and selecting risks, from submission intake to policy issuance and portfolio management. ▪ Claims Management: Capabilities spanning the claims lifecycle from first notice of loss through investigation, evaluation, settlement, and recovery. ▪ Distribution Management: Functions for managing agent/broker relationships, channel performance, commissions, and direct-to-consumer channels. ▪ Customer Management: Capabilities for acquiring, servicing, and retaining customers across all touchpoints and throughout the relationship lifecycle. www.capstera.com 8

9. Enterprise Support Capabilities 6 Enterprise capabilities provide the essential supporting functions that enable core insurance operations and ensure organizational sustainability. ▪ Finance & Accounting: Capabilities for financial planning, accounting, reinsurance, capital management, and statutory reporting. ▪ Human Capital Management: Functions for workforce planning, talent acquisition, development, performance management, and compensation. ▪ Information Technology: Capabilities for managing applications, infrastructure, data, security, and technology services. ▪ Risk & Compliance: Functions for enterprise risk management, regulatory compliance, audit, and corporate governance. ▪ Strategy & Planning: Capabilities for strategic planning, performance management, transformation, and corporate development. www.capstera.com 9

10. Emerging P&C Digital Capabilities 7 Digital disruption is creating the need for new capabilities that weren't part of traditional P&C operating models but are becoming increasingly critical for competitive differentiation. ▪ Digital Experience: Capabilities for delivering seamless omnichannel customer and agent experiences across web, mobile, and emerging interfaces. ▪ Advanced Analytics: Functions for leveraging data science, predictive modeling, and artificial intelligence to enhance underwriting, claims, and customer insights. ▪ Ecosystem Integration: Capabilities for participating in broader ecosystems through APIs, partnerships, and platform-based business models. ▪ IoT & Telematics: Functions for collecting and leveraging real-time data from connected devices to enhance risk assessment and prevention. ▪ Parametric Insurance: Capabilities for designing and delivering index-based insurance products that automatically pay out based on predefined triggers. www.capstera.com 10

11. Heat Mapping for Transformation Prioritization 8 Heat mapping overlays assessment data onto the capability map to identify priority areas for investment and transformation based on strategic criteria. ▪ Strategic Importance: Evaluating each capability's alignment with and contribution to key strategic objectives and market differentiation. ▪ Performance Assessment: Rating the current effectiveness and efficiency of each capability compared to competitors and best practices. ▪ Risk Evaluation: Assessing the operational, technological, and regulatory risks associated with each capability. ▪ Technology Support: Evaluating how well current systems and tools support each capability and identifying technical debt. ▪ Transformation Impact: Creating a combined view that highlights capabilities requiring immediate attention based on multiple criteria. www.capstera.com 11

12. Did You Know Leading P&C insurers maintain capability maps with 10-12 ▪ Level 1 domains, 50-75 Level 2 capabilities, and 300-500 Level 3 sub-capabilities, with 65% standardized across the industry and 35% representing company-specific differentiators. www.capstera.com 12

13. Application Portfolio Alignment 9 Mapping applications to capabilities creates a powerful lens for optimizing technology investments and identifying opportunities for rationalization. ▪ Capability-System Matrix: Documenting which systems support each capability reveals redundancies, gaps, and integration challenges. ▪ Application Rationalization: Capability-based analysis helps identify applications that can be consolidated or retired to reduce costs and complexity. ▪ Investment Prioritization: Understanding capability coverage guides technology investment decisions based on business priorities. ▪ Buy vs. Build Decisions: Capability assessment informs whether to build, buy, or partner for new technology solutions. ▪ Legacy Modernization: Mapping legacy systems to capabilities helps prioritize modernization efforts based on business impact. 13 www.capstera.com 13

14. Accelerating Time to Value with Pre- built Maps 10 Starting with a pre-built and customizable business capability map dramatically reduces development time and cost while ensuring comprehensiveness and industry alignment. ▪ Rapid Deployment: Pre-built maps can reduce development time from months to weeks by providing a comprehensive starting point based on industry best practices. ▪ Industry Alignment: Commercially available maps incorporate industry standards and benchmarks, ensuring your capability model reflects current best practices. ▪ Reduced Resource Requirements: Ready-to-use models minimize the need for specialized architecture resources and extensive business stakeholder time. ▪ Implementation Support: Commercial solutions often include implementation methodologies, training, and tools that accelerate adoption. ▪ Ongoing Maintenance: Vendors typically provide regular updates to reflect industry changes and emerging capabilities, reducing long-term maintenance costs. www.capstera.com 14

15. Capability-Based Strategic Planning 11 The capability map becomes a powerful tool for strategic planning by providing a stable foundation for prioritization and roadmap development. ▪ Capability Gap Analysis: Comparing current capabilities to future requirements identifies gaps that must be addressed to execute strategy. ▪ Investment Planning: Capability-based investment planning ensures resources flow to the areas with highest strategic impact. ▪ Roadmap Development: The capability map provides the foundation for creating a phased transformation roadmap based on dependencies and priorities. ▪ Business Case Development: Capability-based business cases connect technology investments to measurable business outcomes. ▪ Strategic Initiative Alignment: Mapping strategic initiatives to capabilities ensures comprehensive coverage and prevents overlapping efforts. www.capstera.com 15

16. Capability Ownership and Governance 12 Establishing clear capability ownership and governance processes ensures the capability map remains valuable and relevant for decision-making over time. ▪ Capability Owner Definition: Assigning executive sponsors and operational owners for each capability creates clear accountability for performance. ▪ Governance Structure: Establishing a capability governance framework ensures consistent capability definitions and assessments across the enterprise. ▪ Capability Review Cycles: Regular capability reviews track progress, identify emerging gaps, and adjust priorities based on market changes. ▪ Capability-Based Metrics: Developing performance metrics for key capabilities enables outcome-focused management and investment decisions. ▪ Change Management Process: Creating a structured process for updating the capability map ensures it remains current as the business evolves. www.capstera.com 16

17. Did You Know Insurance carriers leveraging pre-built capability maps ▪ typically reduce development time by 60-70% and achieve positive ROI within 6-8 months through improved technology investment decisions. www.capstera.com 17

18. Common Capability Mapping Challenges 13 Understanding and preparing for common challenges helps ensure the success of your capability mapping initiative and maximize business value. ▪ Excessive Detail: Focusing too much on granular capabilities can create overwhelming complexity without adding strategic value. ▪ Organizational Alignment: Capabilities may cross organizational boundaries, creating challenges for ownership and accountability. ▪ Terminology Confusion: Capabilities are often confused with processes, functions, or services, leading to model inconsistency. ▪ Adoption Resistance: Business leaders may resist capability- based planning if they don't see immediate benefits to their operations. ▪ Maintenance Neglect: Many capability maps become outdated because organizations fail to establish processes for regular review and updates. www.capstera.com 18

19. Capability Mapping Technology Enablers 14 Selecting the right tools to support your capability mapping initiative enhances collaboration, analysis, and decision- making. ▪ Architecture Repositories: Dedicated enterprise architecture tools provide robust capability modeling features with relationship mapping and analysis. ▪ Visualization Tools: Visual modeling tools help communicate capability models effectively to business stakeholders. ▪ Collaboration Platforms: Cloud-based collaboration tools enable distributed teams to contribute to capability development and assessment. ▪ Analytics Solutions: Advanced analytics capabilities help quantify the impact of capability investments and track improvement over time. ▪ Integration Capabilities: Look for tools that can integrate with portfolio management and strategic planning systems for a connected view. www.capstera.com 19

20. Evolving Your Capability Map 15 A successful capability map isn't a one-time deliverable but an evolving asset that grows with your organization and adapts to changing market conditions. ▪ Regular Reviews: Schedule quarterly reviews of capability priorities and annual reviews of the capability model structure itself. ▪ Emerging Capability Monitoring: Establish a process for identifying and incorporating new capabilities driven by market or technological changes. ▪ Depth Expansion: Progressively expand the detail level of priority capabilities while maintaining a consistent breadth across the enterprise. ▪ Capability Community: Build a community of practice across business units to share capability insights and best practices. ▪ Benchmarking Updates: Periodically refresh capability benchmarking to ensure your organization remains competitive in critical areas. www.capstera.com 20

21. Takeaway A well-designed Business Capability Map provides P&C insurers with the foundation for strategic decision-making, transformation planning, and technology optimization. By creating a stable view of what the organization does— independent of how it operates—the capability map enables leaders to prioritize investments, identify improvement opportunities, and align technology with business priorities. Whether developed internally or accelerated through pre-built models, a capability-based approach drives clarity, alignment, and measurable outcomes in an increasingly complex and competitive insurance landscape. 21 www.capstera.com 21

22. Next Steps 1. Assess Your Current State: Evaluate existing architecture artifacts and determine how they can contribute to your capability mapping initiative. 2. Secure Executive Sponsorship: Identify and engage a senior business leader to champion the capability mapping effort, connecting it to strategic priorities. 3. Define Your Approach: Decide whether to build your capability map from scratch, leverage industry reference models, or invest in a pre-built solution. 4. Start With Pilot Scope: Select 1-2 critical business domains for your initial capability mapping effort to demonstrate value quickly. 5. Establish Governance: Define processes for capability ownership, assessment, and ongoing maintenance before scaling across the enterprise. 22 www.capstera.com 22

23. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 23 www.capstera.com 23

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