The future of the insurance industry is taking shape today. Start-ups are shaking up the status quo, forcing slow-and-steady insurers into a full-blown sprint. And the finish line isn’t state-of-the-art solutions, it’s customer experience. The catch-22? New technology fuels the future of customer experience.
“Alternative providers are often at the forefront of the latest technological developments, such as artificial intelligence and process automation, putting them in a unique position to implement this technology and enhance the customer experience in a number of ways,” reports GlobalData in its “State of the Insurance Industry” report. “In areas like deep data analytics, through which personalized products and targeting can be created, these tech-based businesses are capable of providing a far more bespoke product.
In other words, insurers with outdated legacy systems are quickly realizing you can’t get there from here.
There was a time, in the not-so-distant past, when insurers were comfortable maintaining legacy core systems. Business processes remained relatively paper intensive, simple maintenance to the legacy system equaled an upgrade, and that was just fine. However, times have changed.
“Persisting with these aging systems will obstruct carrier operations by offering limited agility, increasing complexity, and exposing the carrier to increased fraud risk, in addition to hindering the automation of processes,” reports GlobalData in its Insurance: Trends in claims processing report.
Insurance companies know this. In 2017, they spent more than $185 billion in technology, according to research and consulting firm Celent. Many are making the move to modern core systems like Guidewire and Duck Creek.
Here is the twist. The move to a modern core system is the least of insurers’ tech concerns. Updating and integrating siloed systems causes more pain and frustration. Insurers fear these projects will squander time and devour budget.
Insurance-focused system integrators agree, routinely citing the work associated with integrating third-party applications as the most time-, resource- and risk-intensive aspect of a core-system implementation project.
“Consequently,” reports GlobalData, “the integration of systems is not given due importance, thereby giving rise to issues such as prolonged implementation cycles and failure to use data assets from varied systems.”
There are ways insurers can alleviate these fears. While some of the following three considerations require rethinking the way the company has built its IT stack, which can seem daunting, the benefit is more control over an evolving tech future.
1. Consider a solution that allows you to upgrade in parallel.
An enterprise solution that offers an incremental parallel upgrade (IPU) process, like OnBase by Hyland, allows you to run multiple versions of the solution in parallel from the same database. Because those instances are in the same database, there is no need to duplicate data, documents or configuration items.
How does this work? Imagine a road. It can be a gravel path, a brick road or a 15-lane super highway. Though the experience may be different from one version to the next, each can accommodate almost any kind of transportation, from covered wagons to concept cars.
During the IPU process, the database acts like that road. It accommodates virtually any version of the solution and allows those versions to run side-by-side at the same time — like a brick road running alongside a highway. In the case of OnBase, this is possible because the database is additive, which allows older software versions to run effectively, because it can always locate the information it needs. Newer software can access those older tables and columns, as well as newer ones, to find the information it needs.
Software solutions that follow this model also benefit from upgrade paths that have never been severed. Upgrade from an early version of the solution to the latest version without having to start from scratch. This mitigates risk and alleviates overall concerns about the upgrade process.
2. Consider a solution that you can implement in parallel with your legacy system upgrade.
The leap from legacy system to new core solution can be quite a jump for some insurers. While the latest generation of modular core solutions, such as Guidewire’s InsuranceSuite, are infinitely more configurable, insurers still see deployment as an inherently challenging and far-reaching undertaking. They are not entirely wrong.
One reason is that, as advanced and powerful as they are, today’s core systems still require the integration of several additional third-party solutions to make them complete and able to help the insurer achieve true digital transformation. Even Guidewire executives advise that integrating feeder and output systems to the “transactional mothership” is critical to the success of legacy modernization initiatives.
Depending on the solution’s capabilities, you may find some that allow parallel implementation, side-by-side with the core system deployment. Often, insurers can implement solutions capable of this strategy 50% faster than a normal implementation. This is possible if the solution offers packaged software capabilities tested and approved by the core system provider. Many solution providers will also offer professional services and customer support dedicated to the implementation process to speed things further.
3. Consider a solution that helps you to reduce your IT stack.
Another option insurers may want to consider is implementing a content services platform that allows the reduction of their IT stack over time. The right content services platform can address both the cost and challenge of adding new software. They are configurable platforms that let you build software solutions on top of significant infrastructure.
Content services solutions inherently provide support for key build-development issues: Security, audit logging and support for unstructured content. They are extremely flexible platforms, enabling insurers to model the necessary business data and user experience needed. With the best of these products, this is all handled through configuration, not custom programming.
Furthermore, because these are solution development platforms, the expectation is that insurers will craft multiple solutions on top of them. Each solution and its assets (data structures, process flows and user experiences) are then accessible for every future solution.
The integration of data is all done with configuration, not custom code. This implicit ability to tie solutions together makes it very easy to build a complete view of anything. And with configurable integration capabilities, insurers can tie the solutions into data within their core systems.
Imagine accomplishing the 360-degree visibility you need without waiting for your line-of-business vendor to build their version for you.
The investment may also reduce an insurer’s overall software product purchasing trajectory, eliminating the need for custom integration logic to blend and co-mingle data from disparate software products. Eliminate the fear of upgrading by significantly reducing the challenges of buying – and integrating – new software.
In time, insurers may find they can reduce the total cost of ownership and complexity of the software solutions they are managing and will add to the mix over time. The mature content services infrastructure makes it easy to build exactly what you need for much less expense, time and project risk.
Employing any or all of these considerations will better position the insurer for the tech future that lies ahead. One thing insurers can no longer do is lean on the status quo to get them by for today.