The work of digitally transforming the insurance industry requires both an active, ongoing investment of time and money and a willingness to embrace change (and occasional failure). Innovation can be a frustrating and daunting process and even famously successful digital pioneers haven’t always been able to maintain their leading edge. So what can we reasonably expect from insurers, a highly-regulated, historically slow-to-change industry? In many ways, COVID-19 disruptions helped insurers accelerate parts of our much-needed digital transition, particularly around remote work and customer engagement. But when it comes to modernizing the core technology systems we use for the entire insurance lifecycle (i.e. policy calculations, document management, claims processing, customer engagement and so on) – there remains much opportunity for growth and innovation. From maintaining relevance in the face of InsurTech disruptors to addressing the needs of today’s more demanding consumer, insurers looking to avoid disruption and stay competitive should be fast-tracking the adoption of flexible, scalable, and customer-centric next-generation solutions for their core systems.
For many years, insurers have held onto their manual processes, legacy solutions and remained reluctant about leaving paper transactions and wet signatures behind. Strict regulatory parameters also necessitated a slower evolution for insurance than for some of its peers. Even with its more gradual approach to digitization and tech adoption, over time the industry created an enormous digital infrastructure, particularly around data processing.
But the large, on-premise solutions the industry favored for nearly two decades have become increasingly complicated and costly, requiring updates, integrations, maintenance and a dedicated team of IT resources for management and oversight. To digitally transform these legacy systems means much more than a simple 1-1 replacement. Increasingly, it requires a reimagining of the role tech plays across our entire business and strategic changes that touch on operations, products and services.
Of course, the modernization of insurance’s core systems has been underway for years, as the rapidly changing digital landscape virtually demanded it. And today, cloud-based software and software platforms, open-API technologies, microservices, machine learning and A.I. are all helping to redefine everything we know about insurance -- from the way we onboard customers, to how we process claims, to how we sell products and services.
But to succeed and make the most out of the ever-evolving opportunities new technologies offer, insurers need to take decisive action. That means:
- Moving fast and pursuing aggressive strategies that roll out digital acceleration in core tech that touch on virtually all aspects of their business;
- Forgoing their traditional, on-premise systems for next-gen cloud-native platforms that will help future-proof many of their most essential business functions, and;
- Looking across their business units (beyond IT) at where and how they can adopt next-gen core platform solutions to accommodate the kinds of open, real-time, personalized multi- and cross-channel experiences today’s customers demand.
The companies that can succeed at doing so will be in the best position to scale, compete, and introduce new revenue streams and business models into their ecosystem – now and in the future.