The Digital Insurance conundrum – Legacy core platforms
Why listen to me?
From working in the insurtech market for over 25 years — and before ‘insurtech’ was a buzzword — I have been fortunate enough to work on transformation projects for insurers across 5 continents. These large legacy transformation projects were complex, difficult and — though rewarding in the end — you came through with battle scars that you would wear as a badge of honour.
Turning the clock forward to the Digital Insurance Age, I now speak to insurers who are looking to transform their customer journey, provide better client engagement through intuitive and shorter product question sets, and genuinely want to put the customer at the heart of what they do. This in itself is a fundamental change for them. Insurers demand full-cycle web journeys; responsive design that is optimised for mobile phone engagement; granular product configuration to support new innovative packaging of covers and; new periods of cover to address the gig economy/pay for what you consume, etc. All of this must also be delivered with a high level of insurer self-sufficiency.
Whilst we are transforming everything, the claims process also needs to evolve — become more automated, transparent, efficient and more accurate to reduce claims leakage. Not only that: the supply chain needs to become automated and eliminate fraud — even better if you can do that at point of quotation.
The conundrum, though, is that digitalising one or two processes can be achieved relatively painlessly… BUT to become a truly digital insurer, all roads must lead to modernisation and, in essence, to the replacement of the legacy core administration platform.
Most insurer legacy platforms were not built for today’s business needs – let alone proofed for future change.
What are the options?
Insurers face the daunting task of wrapping their existing legacy platform with new components; moving the complex processing up a level and leaving the old platform as a data store and managing the plethora of downstream integrations. The alternative is tackling the problem from the inside and pushing out: selecting and configuring a new, modern, contemporary core administration platform. There are lots of derivatives of the above but in the past it has boiled down to ‘wrap and extend’ or ‘rip and replace’. Either way; insurers need lots of patience, resources and indeed cap-ex as these projects can invariably take years to deliver. This leaves the ultimate question: do they actually provide a return on the investment in the long-term?
The new insurtech start-ups have upped their game and are forcing all vendors of core platforms to therefore rethink their approach. They don’t just have innovative new tech; they implement in an agile manner — offering speed to market for new products and new channels with deployment timescales of typically 3 to 6 months. Their functional capability can be quite narrow but if it meets the specific business challenge of the insurer, then it can work as an add-on platform to supplement the core platform.
So where is the nirvana?
That all important exam question from insurers is changing in front of us. Having grown tired and become jaded with the big ‘mainstream’ legacy transformation platform vendors and experienced the agility and flexibility of the insurtech start-ups, a new market has emerged.
Insurers are demanding the depth of capability of the mainstream core platform vendors but with the fast and agile delivery of an insurtech. Through the advent of minimum viable products (MVP) approaches, insurers will restrict initial scope in return for speed and cost reduction. It’s become a game of inches with incremental releases delivering additional products, channels and capabilities over and above the MVP. Each of these delivers an incremental ROI which funds the next sprint.
All of this aside, the biggest difference we see is that insurers want and indeed expect self-sufficiency through ‘no-code’ configuration tools that they can put into the hands of their business. Insurers are adding new channels, products, rating, documents, rules, processes and workflows themselves with the vendor merely providing oversight and advice on best practice.
Insurers recognise that in order to become truly digital then all paths lead back to having a modern, contemporary core platform that is designed to be ‘open’ and connect to the wider insurance ecosystem. One vendor may not provide the full Digital Insurance Platform going forward; it will be a best-of-breed approach. But there is an alternative to the traditional replacement models with the large US core platform vendors.
How do we know this? Well don’t just take our word for it; our customers have recognised it too. Direct Line Group has implemented the SSP Digital Insurance Platform for their commercial SME direct business in months (not years!). Further afield, RAC in Queensland deployed our platform to support new channels, products and fuel their growth for a fraction of the cost of the traditional vendors. In Africa, Hollard Insurance upgraded to our digital insurance platform across 7 countries, allowing them to standardise processing and provide local flexibility and agility to meet market requirements.
So when you’re looking to change your internal system and solve this conundrum, you know you have your answer; SSP Digital Insurance Platform.