Business Capability
Architecture for Life
Insurance Excellence
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Transform Vision to Value:
Capabilities as the Blueprint for
Industry Leadership
▪ In today's rapidly evolving insurance landscape, carriers face
unprecedented challenges from digital disruption, changing
customer expectations, and regulatory pressures. Navigating
this complexity begins with clearly understanding what the
organization does—not how it does it. Business capability
mapping provides this crucial foundation by documenting the
essential abilities that define a life insurance carrier,
independent of how those capabilities are currently
implemented.
▪ A well-constructed capability map is the organizational north
star, aligning strategic initiatives, technology investments,
and operational improvements around a common language
and framework. For life insurance carriers specifically,
capability mapping offers the structural clarity needed to
modernize legacy operations while preserving the core risk
management and customer protection
values that define the industry.
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The Foundational Role of Business
1
Capability Mapping
Business capability mapping is the cornerstone of effective
enterprise architecture, providing a stable reference model
that remains consistent even as processes, technologies, and
organizational structures evolve around it.
• Strategic Alignment: Business capability maps create a
direct line of sight between strategic objectives and the
operational capabilities needed to achieve them.
• Common Language: The capability framework establishes a
shared vocabulary that bridges communication gaps between
business and technology stakeholders.
• Investment Prioritization: A comprehensive capability
assessment reveals maturity gaps that inform technology
investment and process improvement priorities.
• Transformation Navigation: Capability maps serve as the
constant reference point amidst organizational change, ensuring
that transformation initiatives maintain strategic coherence.
• Operational Clarity: The capability perspective cuts through
functional silos, highlighting interdependencies and
collaboration requirements across the enterprise.
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Defining the Capability Map
2
Structure
A well-designed capability map requires thoughtful structuring
to balance comprehensiveness with usability. The hierarchical
organization of capabilities creates a navigable model that
stakeholders can easily understand and apply.
• Capability Hierarchy: Most effective capability maps
organize into three levels—Level 1 (major domains), Level 2
(capability groups), and Level 3 (discrete capabilities)—with
each level increasing in specificity.
• Appropriate Granularity: The optimal decomposition
reaches the level where capabilities can be meaningfully
assessed and owned, typically 150-250 Level 3 capabilities for a
mid-sized life insurer.
• Capability Definition: Each capability represents a "what"
not a "how"—defined as a business ability independent of the
processes, technologies, or organizational structures currently
implementing it.
• Mutual Exclusivity: Well-constructed maps ensure that
capabilities do not overlap, with each capability representing a
distinct business function.
• Collective Exhaustiveness: A complete capability map
accounts for everything the organization does, leaving no
significant business functions unmapped.
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Life Insurance Core Capability
3
Domains
Life insurance capability maps typically organize around several
primary domains that collectively represent the full spectrum of
carrier operations. These domains provide the highest-level
organizing framework for more detailed capabilities.
• Product Management: This domain encompasses the
capabilities required to design, price, and maintain insurance
products throughout their lifecycle.
• Customer Engagement: These capabilities focus on
acquisition, relationship management, and servicing across the
customer journey.
• Underwriting & Risk: This domain covers risk assessment,
policy issuance, and ongoing risk management capabilities.
• Claims Management: These capabilities enable efficient,
accurate, and customer-centric processing of death benefits
and living benefits.
• Investment Management: This domain includes capabilities
for managing general account and separate account assets to
meet liability requirements and generate returns.
• Regulatory Compliance: These capabilities ensure
adherence to the complex regulatory requirements governing
life insurance operations.
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Identifying Distinctive Life
4
Insurance Capabilities
Within the broader capability framework, certain capabilities
distinctively characterize life insurance operations and require
special attention in mapping exercises. These insurance-specific
capabilities often represent core competitive differentiators.
• Mortality Assessment: This capability enables accurate
evaluation of mortality risk through medical, behavioral, and
demographic factors to establish appropriate pricing and
coverage terms.
• Actuarial Modeling: This cornerstone capability allows
carriers to project financial outcomes across decades-long
policy lifecycles under various economic and demographic
scenarios.
• Policy Administration: This capability maintains the
contractual relationship between insurer and policyholder,
managing all aspects of in-force policies throughout their multi-
decade lifecycles.
• Benefit Administration: This capability ensures accurate
and compliant distribution of various benefit types including
death benefits, living benefits, and policy loans.
• Agent/Broker Management: This capability supports the
recruitment, licensing, training, and performance management
of the distribution channel that remains critical for complex life
products.
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Did You Know
▪ Transformation Success Rates: According to a 2024 Gartner
study, asset management firms with mature Enterprise
Architecture practices achieve a 64% success rate in digital
transformation initiatives, compared to just 27% for those
without formal EA functions.
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5 Mapping Approach and Methodology
Successful capability mapping follows a structured approach
that balances industry standards with organization-specific
requirements. The methodology ensures both
comprehensiveness and relevance.
• Top-Down and Bottom-Up: Effective mapping combines
executive-level strategic perspectives (top-down) with
practitioner insights about operational realities (bottom-up).
• Industry Reference Models: The mapping process should
leverage insurance industry reference models as starting points,
adapting them to the specific organization rather than starting
from scratch.
• Iterative Development: Capability maps evolve through
successive refinement cycles, gradually building consensus and
incorporating feedback from diverse stakeholders.
• Cross-Functional Validation: The draft capability model
requires validation across functional areas to ensure accuracy,
completeness, and organizational alignment.
• Governance Framework: Establishing clear ownership and
change management processes for the capability map ensures
its ongoing relevance and integrity.
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Accelerating Value with Pre-Built
6
Capability Maps
While creating a capability map from scratch is possible, starting
with a pre-built, insurance-specific capability model dramatically
accelerates time-to-value while reducing cost and effort.
• Rapid Implementation: Pre-built maps reduce the typical
mapping timeline from 6-9 months to 6-9 weeks, allowing
organizations to quickly advance to value-generating assessment and
planning activities.
• Industry Validation: Commercially available capability models
incorporate perspectives from multiple carriers and industry experts,
providing built-in validation that would be difficult to achieve
independently.
• Reduced Resource Requirements: Pre-built maps significantly
decrease the internal resource commitment required, typically
reducing effort by 60-70% compared to creating a custom map from
scratch.
• Best Practice Integration: Leading commercial capability models
incorporate established industry best practices and regulatory
requirements, ensuring comprehensive coverage of the insurance
domain.
• Customization Framework: Quality pre-built maps provide a
structured approach for tailoring the model to organization-specific
needs while maintaining the integrity of the underlying framework.
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Capability Assessment
7
Fundamentals
Once mapped, capabilities must be assessed to identify
priorities and guide transformation efforts. The assessment
methodology directly influences the quality of resulting
insights.
• Multi-Dimensional Evaluation: Effective assessments
examine capabilities across multiple dimensions including
strategic importance, current performance, future
requirements, and competitive positioning.
• Maturity Scaling: Each capability receives a maturity rating
on a defined scale (typically 1-5), with clear criteria defining
each level to ensure consistent evaluation.
• Evidence-Based Assessment: Rigorous assessment processes
require specific evidence to support maturity ratings, avoiding
subjective judgments that undermine credibility.
• Gap Analysis: The difference between current and target
maturity levels reveals priority areas for investment and
improvement initiatives.
• Validation Workshops: Cross-functional workshops validate
preliminary assessments and build organizational consensus
around capability priorities.
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8 Visualizing the Capability Map
Effective visualization transforms the capability map from an
abstract concept to a powerful communication tool. The visual
representation must balance detail with clarity to engage
diverse stakeholders.
• Heat Mapping: Color-coded visualizations highlight
capability gaps and priorities, making complex assessment data
immediately comprehensible to executive audiences.
• Hierarchical Navigation: Interactive visualization tools allow
users to navigate from high-level domains to detailed
capabilities, controlling information density based on their
needs.
• Strategic Alignment View: Visual overlays demonstrate how
capabilities connect to strategic objectives, highlighting the
capabilities most critical to achieving organizational goals.
• Initiative Mapping: Visualization techniques show how
current and planned initiatives address capability gaps,
revealing potential redundancies or unaddressed needs.
• Stakeholder-Specific Views: Tailored visualizations for
different audiences emphasize the capability dimensions most
relevant to each stakeholder group.
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Did You Know
▪ Implementation Reality: While 87% of life insurance
executives consider capability mapping essential for digital
transformation, only 23% report having comprehensive, up-
to-date capability maps that actively guide decision-making.
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Connecting Capabilities to
9
Enterprise Architecture
Business capabilities provide the bridge between strategic
intent and the technical architecture needed to enable it.
Establishing these connections creates a powerful framework
for technology planning.
• Application Portfolio Alignment: Mapping applications to
the capabilities they support reveals areas of duplication, gaps
in coverage, and opportunities for rationalization.
• Data Architecture Integration: Identifying the information
requirements of each capability creates a business-driven
foundation for data architecture and governance initiatives.
• Technology Roadmap Development: Capability assessments
directly inform technology roadmaps by highlighting where
technical improvements will deliver the greatest business value.
• Solution Architecture Guidance: Capability definitions and
requirements provide essential context for solution architects
designing new systems or enhancements.
• Technical Debt Prioritization: The strategic importance of
capabilities helps prioritize technical debt remediation efforts
based on business impact rather than technical factors alone.
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Leveraging Capabilities for Process
10
Optimization
While capabilities define what the organization does, processes
define how those capabilities are executed. The capability map
provides essential context for process improvement initiatives.
• Process-Capability Alignment: Mapping processes to the
capabilities they implement reveals opportunities to
consolidate, standardize, or eliminate redundant processes.
• End-to-End Process Visibility: The capability perspective
highlights process fragmentation across functional boundaries,
enabling true end-to-end optimization.
• Automation Prioritization: Capability assessments help
identify which processes would deliver the greatest value
through automation or digitization.
• Performance Metrics Alignment: Capability-aligned process
metrics ensure that operational improvements contribute
directly to strategic objectives.
• Technology-Enabled Process Redesign: Capability
requirements provide the business context needed to redesign
processes in conjunction with new technology implementations.
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Organizational Alignment Through
11
Capabilities
Capability maps provide a powerful lens for optimizing
organizational structure and governance. The capability
perspective reveals opportunities to improve alignment
between structure and strategy.
• Capability Ownership: Assigning clear ownership for each
capability ensures accountability for performance and
improvement initiatives.
• Organizational Design Insights: Capability mapping often
reveals structural inefficiencies where critical capabilities are
fragmented across multiple organizational units.
• Role Definition: Capability requirements inform skill profiles
and role definitions, ensuring that the organization has the
talent needed to execute critical capabilities.
• Governance Optimization: Capability-based governance
structures often prove more stable and effective than those
based on volatile organizational structures.
• Change Impact Analysis: The capability map helps identify
which parts of the organization will be most affected by
strategic or operational changes.
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Driving Digital Transformation with
12
Capability Maps
Digital transformation in insurance requires a clear
understanding of how digital technologies will enhance specific
business capabilities. The capability map provides this essential
foundation.
• Digital Maturity Assessment: Evaluating the digital maturity
of each capability reveals priority areas for digital investment
and transformation.
• Capability Digitization Sequencing: The capability map
helps sequence digital initiatives to build on each other and
deliver value incrementally.
• Customer Journey Connection: Mapping customer journeys
to underlying capabilities highlights where digital enhancements
will most improve customer experience.
• Legacy Modernization Strategy: Capability assessments
inform legacy system replacement strategies by identifying
where current technology most constrains business
performance.
• Digital Platform Planning: The capability perspective helps
define requirements for digital platforms that will support
multiple business functions.
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Did You Know
▪ Time Investment: Insurance companies typically require
800-1,200 person-hours to develop a comprehensive
capability map from scratch, compared to 200-300 hours
when adapting a pre-built industry model.
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Capability-Based Portfolio
13
Management
Capability maps transform project portfolio management from a
technology-centric to a business-value-centric discipline. This
shift improves resource allocation and return on investment.
• Initiative Rationalization: Mapping initiatives to capabilities
reveals redundancies, conflicts, and gaps in the current project
portfolio.
• Value-Based Prioritization: Capability maps enable
investment prioritization based on strategic importance and
performance gaps rather than politics or technical factors.
• Resource Optimization: Understanding which capabilities
receive disproportionate investment helps balance resources
across the capability landscape.
• Benefit Realization Tracking: Capability-based metrics
provide a framework for tracking whether initiatives deliver
their intended business benefits.
• Portfolio Balancing: The capability perspective helps
balance investments across strategic, operational, and
regulatory requirements.
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14 Evolving the Capability Map
While capabilities remain more stable than processes or
technologies, the capability map must evolve to reflect
changing strategic priorities and market conditions. Effective
governance ensures the map remains relevant.
• Periodic Review Cycles: Establishing regular review cycles
(typically annual) ensures the capability map remains aligned
with strategic priorities.
• Change Control Process: A formal change management
process maintains the integrity of the capability map while
allowing necessary evolution.
• Emerging Capability Identification: Environmental scanning
identifies new capabilities required by changing customer
expectations, regulatory requirements, or competitive
dynamics.
• Capability Retirement: Periodically evaluating capabilities
for continued relevance allows the organization to formally
retire capabilities that no longer provide value.
• Continuous Improvement: Ongoing refinement of capability
definitions and relationships improves the map's utility for
diverse stakeholders.
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Implementing Capability-Based
15
Planning
Capability-based planning transforms how organizations define,
evaluate, and manage change initiatives. This approach directly
connects investments to strategic outcomes through the
capability lens.
• Capability-Based Business Cases: Requiring business cases
to explicitly identify the capabilities they enhance ensures
strategic alignment and facilitates comparison across proposals.
• Capability Improvement Roadmaps: Developing
comprehensive improvement plans for priority capabilities
provides a framework for coordinating multiple initiatives.
• Integrated Planning Process: Embedding capability
assessment in annual planning cycles ensures that budgeting
and resource allocation decisions reflect capability priorities.
• Executive Reporting: Capability-based executive reporting
highlights progress against strategic capability targets and
identifies emerging gaps.
• Outcome Measurement: Tracking capability performance
improvements provides a direct measure of whether
transformation initiatives deliver their intended value.
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Takeaway
Business capability mapping provides the foundational
architecture that life insurance carriers need to navigate
complex transformation initiatives. By creating a stable
reference model of what the organization does—independent of
how those functions are currently performed—capability maps
enable strategic alignment, investment prioritization, and cross-
functional collaboration. While developing a comprehensive
capability map requires significant effort, starting with pre-built
industry models dramatically accelerates time-to-value.
Organizations that embed capability-based planning into their
strategic and operational processes are better positioned to
successfully execute transformation initiatives and adapt to
evolving market conditions.
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Next Steps
1. Assess Your Current State: Evaluate existing capability
modeling efforts within your organization, identifying where
formal capability maps exist and where gaps remain.
2. Define Your Mapping Approach: Determine whether to build
a capability map from scratch or adapt a pre-built industry model
based on your organization's specific needs, timeline, and
available resources.
3. Establish Governance: Define ownership, maintenance
processes, and integration points for the capability map before
beginning development to ensure long-term sustainability.
4. Start With Strategic Priorities: Focus initial mapping and
assessment efforts on the capability domains most critical to
current strategic initiatives to demonstrate value quickly.
5. Build Organizational Capability: Develop internal expertise
in capability modeling through training and knowledge transfer,
reducing dependence on external resources for ongoing map
maintenance and evolution.
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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.
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