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Spotlight: Technology - A digital future

digital future

It’s no secret that many insurers are still held back by outdated legacy software systems, but for many, the significant operational impacts of the inefficiencies this engenders is difficult to quantify

scott field
Scott Field, senior director of product marketing and strategy, Duck Creek Technologies

The fact is that decisions made five years ago following long procurement processes often end up in the implementation of on-premises systems that are out of date from the moment they are turned on – and almost immediately need to go through an upgrade cycle.

Now is the time companies should be investing in becoming more innovative while improving customer satisfaction, rather than just spending a fortune keeping the lights on and accumulating technical debt all the while.

The architecture exists to overcome this challenge, but to adopt takes bold decision-making and confidence in the solutions available. With evergreen Software-as-a-Service technology, insurers can refresh and configure their core systems to avoid technical debt.

It is vital for insurers to upgrade their legacy systems in an ever-changing insurance market, and a thorough understanding of IT spend and the real cost of grappling with outdated legacy systems is key to improving profitability and operational agility.

The winds of change

The insurance market is changing; or more so, it has changed. Customer demands have evolved beyond the capabilities of many legacy systems, and the evolution in buying habits continues apace. Customers expect personalised service, tailored products, and 24/7 access to buy, update, and access their policies. Even simple technology that is capable of pre-filling customer data is a must nowadays.

For insurers, this means operating systems that support mobile applications, have automated technology, and have the ability to develop and deliver the right products and services efficiently and effectively. It means operating systems that are future-ready, adaptable, and resilient across an enterprise.

To get this critical competitive advantage, insurers require easy-to-integrate, highly-configurable platforms that operate enterprise-wide, across product lines and territories, and low-code SaaS implementations are the best, most modern, and future-ready way to achieve this.

An education process

Even though the technology is out there, tried and tested, some insurers are still restrained from migrating from their legacy systems – many driven by fear of a full systems overhaul and the change this represents.

Businesses’ willingness to embrace evergreen SaaS technology also hinges on their comfort and understanding of security, particularly when there isn’t the physical presence of a huge server room to lock at the end of the working day.

But cloud providers have increased investment in security and scalability far above what insurers can provide in-house – Microsoft Azure alone invests more than a billion dollars a year in security research and development.

To migrate from legacy systems to SaaS, insurers first need to know what they are aiming for and feel confident that their technology and implementation partner can deliver this – from helping them envision what is possible, to building, delivering, and ultimately running a more innovative and efficient business.

Thankfully, a broad array of digital implementation services are available to help insurers pivot to low-code platforms, and take advantage of the potential and higher levels of performance on offer.

These platforms allow insurers to leverage productised integrations to today’s most widely used property and casualty insurance data and services solutions, including motor vehicle records lookups, hazard metrics, document management, and more.

Fully managed and maintained, these pre-built integrations reduce implementation timeframes and ensure business continuity with full support included throughout upgrades, as well as when third-party vendors modify their offerings.

A better-value IT spend

Legacy systems are inflexible, costly, and a beast to keep up to date. They need constant rewriting to “add on” the basic requirements and configure to the latest updates, and even then, they are at odds with the ambition of joined-up customer service. In a nutshell, closed core systems hinder innovation: they are the cause of technical debt.

We all know there is pressure on spend and budget, so money is diverted to keeping systems ticking over and new ideas are often overlooked or put on the back burner.

But this attitude of “keeping the lights on” simply won’t work in this new era of digital. In order to align their capabilities with the demands of their insureds, insurers’ IT systems need to be future-ready; they need to be able to adapt; they need to offer enhanced flexibility and improved responsiveness.

Instead of spending money fixing what is there and what is essentially obsolete, far more value in the short and long term can be achieved by implementing much better platforms.

Some insurers are completing digital transformation projects in months, not years. In contrast, implementing a core system on-premises can take years, and the onus of responsibility for upgrading and maintaining such a system still lies with the insurer.

A mature cloud environment

We are now operating in a tried and tested, mature SaaS environment, where the provider manages maintenance, upgrades, and integrations. When these problems evaporate, insurers reap the rewards of digital transformation almost immediately, both in terms of freed-up resources and overall IT spend.

Good technology has a democratising effect on business. It enables the largest number of users to more quickly and dramatically improve their work output, because it minimises barriers such as cost structures, complexity, and clumsy interfaces.

This is all about making processes more accurate and less costly so insurers can get to what’s important – bringing new, differentiated products and customer experiences to market quickly, not when they are old hat.

Accessing the technology ecosystem

The insurance market traditionally relies on ecosystems built among capacity providers, intermediaries, and service providers. Technology ecosystems are the same in that respect. Think of it like a portal to connect and integrate. They are made up of pre-built, third-party data and service providers, where new insurtechs spanning all lines of business are continually scoped out by the ecosystem platform provider and added. Technology ecosystems allow insurers to partner and collaborate with other service providers to get the service they – and their customers – require.

From predictive fraud analytics to in-home and vehicle telematics, the insurance industry is booming with innovative new capabilities, data sources, services, and insurtech startups.

By providing insurers with clean integration patterns, workflow instructions, screens, and more, SaaS providers offer insurers a jumping off point for taking advantage of these new capabilities in unique ways and quickly integrating them into their core systems and business processes.

Attracting new talent

A final thought here on the constant drive to attract and retain new talent to our industry. Many professionals are used to accessing cloud-based services across their daily lives, and may well be put off by having to use clunky old legacy systems that feel like a step into the past.

By leveraging the best available technology and continuously delivering new functionality to solve ever-changing property and casualty insurance business challenges, insurers not only put their best foot forwards operationally, but also stand themselves in good stead to improve their own images and attractiveness within the talent pool. 

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Spotlight: Technology – Embracing evergreen technology

Outdated legacy systems have haunted the insurance space for years, stifling innovation and pushing up development costs. Now, with pressures coming from new entrants and customer expectations increasing, Post looks at why insurers are looking to evergreen technology solutions to fast-forward their IT plans

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