December 12, 2017 by Manish Shah, Executive Vice President and Leader, Global Software Product Division,Majesco
Insurance is entering the “digital age” and a race to the future for insurers has begun. As the economy shifts toward platforms across all industries, insurers are also creating innovative new business models to build competitive advantages. These advantages are likely to leverage platform capabilities to try different business models, those assisted by the use of broad ecosystems, enhanced customer experience and technology innovations such as cloud computing, artificial intelligence and machine-learning.
Although any doubt regarding the need to digitalize insurance has likely ceased, related efforts remain an unpaved path for many insurers. Insurers are still in the midst of legacy modernization of their core systems for strengthening their back-end processing capabilities, although most realize digital transformations are necessary to bring meaningful benefits to customers.
While the traditional approach of building portals on top of back-end systems is a quick-fix, it does not come close to helping digitalize insurance products, operations and services.
Digital capabilities demonstrated by Uber, Amazon, Google and Netflix can easily cultivate customers through better experiences and newer products while constantly optimizing their own operating models. Starting as technology companies, though, they were not burdened with the complexity of either legacy systems or insurance products.
Confined within a regulatory framework, insurance companies must continue to support current products and distribution channels, as well as allocate the budget to keep current systems running. It is certainly important for insurers to understand the balance they must achieve in the midst of competitive threats, including from new entrants that are already starting to change customer expectations from insurers.
An effective digital transformation demands that core, data and digital capabilities are decomposed, available as micro-services for integration and are “fused” together for designing a digital experience. This is the digital fusion.
The network of ecosystems that will provide digital fusion will create a world that is much better-prepared to cope with risk, prevent claims and minimize catastrophic impact. In addition, through improved risk selection, insurers will be able to quickly add products and services to their mix.
Currently, digital fusion is erasing the concept of insurance and redrawing an entirely new vision and definition. The word “insurance” will mean something completely different to a homeowner in 2020 than it did to the homeowner in 2015, and the overall concept of insurance will be vastly improved.
This shift crosses all lines of insurance, which is good, because those lines will begin to blur as digital fusion takes hold within insurance operations.
Read the full article in the Digital Edition of the November 2017 Canadian Underwriter.
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Manish Shah, Executive Vice President and Leader, Global Software Product Division, Majesco