Insurance is a form of risk management, used to hedge against the risk of a contingent or uncertain loss. Insurance carriers are here to protect their clients against financial losses, it is what they do best, protect customers.
But somewhere along the way Insurance companies got into technology business and built massive technology solutions in-house. One reason for the insurance industry’s affinity to building technology solutions in-house is security concerns, the belief that somehow the new technology will inhibit their ability to meet regulatory requirements. Traditional insurers have spent millions building technology solutions that are now outdated and have become legacy systems.
Facing increasing challenges from Insurtech’s and the availability of a host of new technology solutions, the incumbent insurance companies are now realizing it is time to replace these in-house legacy systems with modern systems. More and more, CIOs are leveraging digital insurance initiatives to speed the launch of new products and meet increased customer expectations with new digital solutions that are not completely built in-house. Savvy carriers are also recognizing the opportunity to use low code platforms and cloud solutions readily available in the marketplace today.
Here are three opportunities for Carriers to use digital transformation and launch new products faster to meet the expectations of digital-native customers:
According to Forrester,companies are now under pressure to introduce significant new products and services quickly at a lower cost. They often rely on new and innovative software to get them there. Digital transformation using low code platforms area popular option for insurers. Low code platforms have an open architecture and can be used to rapidly build and deploy underwriting solutions, claims applications, and broker portals. When choosing a low code platform, your focus should go beyond the ability to build applications quickly, and also look into the necessary infrastructure to host it, scale it, and manage it securely.
One of the ways to move forward rapidly and succeed is for insurers to move their applications to the cloud. These days cloud computing is not just about IT architecture; cloud offers a way to use modern technology to solve real business problems. For insurance carriers, the cloud creates an opportunity for flexible, rapid, and sustainable growth. Moving to the cloud creates a quicker path to launch new digital initiatives and compete effectively in this digital age.
The conventional wisdom is that the cloud is not secure. But according to a Novarica study security is widely seen as a benefit of cloud technology, and by careful management,there are significant cost savings to be reaped by moving to the cloud. Most cloud infrastructure providers offer a very robust security platform and have SOC certification. By moving to cloud carriers are not only able to innovate and bring new products rapidly, but they can reduce their infrastructure cost significantly.
The insurance industry has clearly identified that cloud infrastructure is one of the steppingstones to digital transformation. Using cloud infrastructure services, insurers moving to the cloud can accelerate their time-to-market and provide a real-time customer experience that their clients crave.
Application Programming Interface (API) enables you to seamlessly connect data in multiple internal and external applications and serve the customers in real-time. APIs are snippets of computer code that enable software applications to interact with one another in a common language. APIs, are a critical building block to build connected insurance enterprises. With APIs Carriers can offer real-time data and products that can be customized to transform the needs of policyholders. APIs enable insurers to gather data from multiple internal, external data sources and to share this data across various products, solutions, digital platforms. Once an API is built from an application like a Rating engine or Claims system, the API can be used to connect with various internal and external processes and applications. APIs enable carriers to offer an omnichannel experience to their customers with speed.
In legacy systems, each application is connected to another in a one-on-one connection making it cumbersome and time-consuming to build the connections. Using APIs one connection built can be used to connect to multiple applications giving insurers speed and agility in building a connected enterprise.
To give an example here, if you want your customer to be able to see their policy and payment information in real-time, then the backend core systems that hosts this data has to be connected to the front end customer application. If the core system is a legacy system, then it is not being updated in real-time. With APIs the front end customer systems can connect dynamically to backend core systems and data can be retrieved and sent back seamlessly. This allows for real-time sharing of data and gives customers a customer-centric solution. Carriers are choosing to design and build APIs in JSON or XML formats.
To successfully implement a digital transformation, carriers should establish digital road maps that prioritize projects and track progress. When done right, digitization can lead to a rapid return on investment along with a customer-centric approach.