When it comes to changing the game, insurance is a different—and complex—beast.
And there’s a simple reason for that: Safeguarding the public and businesses from constantly emerging risks requires a constantly evolving industry.
Many insurers have grown from offering a single product—say, personal or auto—to operating as multi-line providers.
Remember, when some of these companies were founded as long as seventy-five or a hundred years ago, who could have imagined the advent of cybercrime or the magnitude of hurricanes brought on by climate change?
Remaining ahead of the risk curve while providing new and enhanced products is a tall order in and of itself—and that’s before acknowledging that every state in the U.S. has its own regulatory regime for insurance.
Further, the margins on insurance tend not to be as wide as in other industries simply because the risks and events are very unpredictable. From a pricing and underwriting perspective, establishing a standard is a thorny proposition.
Add to the internal to-do list innovating backend processes or building a better digital experience akin to retail or banking to meet dynamically and aggressively changing consumer demands—from self-service capabilities to intuitive portals to access to a sophisticated digital virtual agent—can be downright daunting.
So, what happens?
Well, there is a proliferation in the back office of legacy systems that must be customized yet again for a new product or territory. Indeed, some insurance carriers may have fifteen to twenty different policy admin systems.
This is to say, in order both to maintain competitive advantage and maintain profitability, insurers are constantly focused on how to drive improved efficiency within their operations—which requires a significant investment in IT.
This trial by fire has had an upside, however: The insurance industry has had to learn to be nimble and pivot—no small accomplishment when you’re carrying all those legacy systems.
The solution to meeting these challenges?
Carriers must learn to modernize their legacy application portfolio while concurrently driving innovation and digital transformation.
Gone are the days of multi-year and multi-million-dollar core systems replacement as the predecessor requirement to begin to digitize and innovate. Carriers should strongly consider how to leverage API architecture, business rules extraction, RPA, and data lakes to modernize legacy applications and enable concurrent innovation.
The path and priorities for legacy application modernization should be set based on the digital transformation and innovation strategy, enabling the strategy vs looking at each as separate workstreams.
This will enable Carriers to accelerate their transformation and enable them to create a steady stream of customer experience, product, and data-driven insight innovations.
At OZ, we have significant experience in legacy application and data modernization architecture and strategies to help our clients accelerate their digital transformation and innovation initiatives
Contact Mark Smith, President of the Global Insurance Practice and Insurance Practice Leader, to discuss how Intelligent Automation can streamline processing and enhance profitability for your business.