8 Questions Insurance CIOs Must Ask to Meet Customer Demands

Normand Lepine, Data and Analytics Lead at NTT DATA Services

The universe is expanding. So too are customer expectations, thanks to platform-driven companies like Amazon, Google and Netflix that provide fast and easy digital experiences to their customers. In fact, NTT DATA proprietary research shows that a large majority (87 percent) of habitual mobile users surveyed would swap carriers for the promise of a better digital experience.

With InsurTechs promising simplicity and financial institutions orbiting markets traditionally served by insurance companies, the stakes have never been higher for carriers trying to engage customers and distributors, including not just policyholders, claimants and beneficiaries but also the independent and captive agents and brokers that bring in business.

Yet, legacy systems—abundant with irreplaceable core functions—are weighing down carriers, impeding their ability to adapt quickly, launch new products and keep up with customer demands for better service and customization. For CIOs, this begs the question, can I adequately modify our core systems to meet the ever-accelerating pace of change or is it time to explore a new approach? Enter insurance platforms and InsurTech ecosystems.

The Platform Alternative

Leaders in industry sectors outside insurance have built their business infrastructure as platforms and developed strong partner ecosystems to reduce the need to supply every business function internally. Amazon, Apple, Google and Netflix are the most obvious examples.

Carriers that can respond quickly to ever-expanding business and consumer demands will avoid disruption and thrive

A platform in this context is a business framework that allows multiple business models to be built and supported on a single technical framework. A partner ecosystem is a set of businesses functioning as a unit and interacting with a shared market for services. An insurance platform and ecosystem might include unifying core systems, a digital front-end, a data and analytics back-end, leveraged by cloud and supported by an open marketplace of InsurTech partners.

Many carriers cannot consider complete replacement of policy administration systems (PAS) because of the cost of conversion but more importantly because of the risk to the business. A significant number of case studies exist to demonstrate lengthy replacement projects that failed to launch.

However, maintaining the core functions of policy administration within those systems and making them part of a platform offers a lower risk option. A platform approach allows you to couple, swap and assemble technology components to support any business model you need to support. There are a number of examples of insurance carriers leading the way. For example, Chubb’s partnership with retailer Suning, Progressive’s partnership with Zubie, and Nest’s partnership with Liberty Mutual.

Is an Insurance Platform Right for My Organization?

Consider the following set of questions to understand if this approach makes sense for your business:

1. Can I separate some of the business functions supplied by current core systems to allow replacement with modern alternatives available from vendors or partners?

2. Can I create a strong data layer independent of business functions to allow analytics to inform and embed intelligence into business processes?

3. Can I support access to core PAS functions from any business process outside of traditional online or batch processing?

If the answer to these questions is yes, you may be able to leverage your current core systems as part of an insurance platform and gain the benefits achieved in other industry sectors. Pursuing this strategy allows you to prepare your organization to meet the speed of change and disruption emerging in the insurance industry.

Ask these questions to determine your next steps:

1. Can I integrate different middle office and back office functions with a single front end for each of my buying and selling customer bases that is consistent across portal, mobile and contact center solutions?

2. Can I move data and applications to the cloud independently to decouple the layers of my platform?

3. Can I improve the application to underwriting process by deploying new technology solutions or SaaS solutions available from the InsurTech ecosystem?

4. Can I create straight through processing for onboarding or claims with similar solutions?

5. Can I rapidly assemble solutions for new business models such as usage-based or on-demand without major modifications to core systems?

Your answers will direct how to best leverage existing business infrastructure into an insurance platform that will keep you on the leading edge without the risk of being on the bleeding edge. There are many companies among the InsurTech community with adequate experience and success to provide components for the ecosystem-supported platform approach, enabling you to focus on addressing improvements and readiness for what is already in place.

The race is on. Carriers that can respond quickly to ever-expanding business and consumer demands will avoid disruption and thrive. Those that cannot may not be long for this world.