The acceleration of digital transformation in the pandemic era means insurance companies need to evolve, and that starts with reimagining your core technology systems.
Over the insurance industry’s long history, a key hallmark has been its promise of peace-of-mind, trust and assurance at critical life moments and stages. While that fundamental promise has never really changed, the way in which the industry offers it has continually evolved — both in terms of offerings and the mechanisms it uses to deliver them.
That has never been more starkly apparent than it is right now, as products are developed at a breakneck pace, processes evolve faster than ever, and customers demand improved experiences from carriers that mirror the experiences they enjoy with leading retailers.
But progress has been slow. Our research shows that despite the insurance sector investing nearly $28 billion on customer experience, fewer than half of global respondents (49%) feel their insurance provider will be responsive to their basic needs.
Why do these barriers persist? As an industry, insurance has relied heavily on traditional business models built on legacy systems that have become ever more sprawling through industry consolidation. And while strides have been made in recent years to create more intuitive, interactive and seamless customer-facing experiences, the industry still lags behind in making digital transformation investments comparable to other industries.
A recent report by Deloitte described the insurance industry as standing “on the precipice of profound change,” citing shifting consumer expectations, innovative product lines, mergers and alliances and disruptive technologies as the major themes for coming years.
The pandemic, rather than halting this evolution, has only accelerated it, as it has shaken people out of familiar routines, changed consumer needs and behaviours and driven home to carriers the urgency of delivering outstanding digital experiences across all platforms. It has further stoked transformation initiatives that, rather than tinkering around the edges in the customer-facing layer only, address the heart of insurers’ IT core technology systems.
That’s what we refer to as “coretech transformation.” Coretech is the logical evolution of insurance core systems in the insurtech era.
Driven by advances in cloud technology and APIs, new coretech platforms can free insurers from the shackles of legacy technology and allow them to deliver better experiences — not just to customers, but also to other critical constituencies, such as agents and partners.
Here are three reasons why insurers should focus on coretech as a central component of the digital transformation efforts…
With cloud-based coretech, insurers are able to innovate more freely and at a far more rapid pace, testing new approaches in a matter of weeks rather than months, and bringing products and services to market far more efficiently. And with access to microservices, open platforms, and connected devices, insurers can also be more innovative about the way they bundle offerings and cross-sell, including both insurance and non-insurance products and services.
Power of choice
With so many options available to insurance buyers, one-size-fits-all policies are rapidly becoming a thing of the past. Along with greater choice, consumers also have more information available to inform their buying decisions — and one truth of the digital economy is that people are willing to research and assess which product is right for them. Cloud-based coretech gives carriers greater flexibility in structuring highly customized offerings that meet buyers’ needs based on a deeper understanding of their buying habits.
Cloud-based coretech also gives insurers access to a deeper well of real-time data that can be put to work to build bridges with consumers beyond just calculating premiums. Coretech-enabled insurance can respond to changes in customer behaviour in real time, so as their lifestyles change carriers can anticipate needs and respond proactively.
Tomorrow’s leading carriers will be those that are able to reimagine their coretech to create flexible, responsive digital ecosystems that empower consumers to manage their financial lives. Insurers who adjust first to this new reality have a powerful opportunity to drive the industry forward — and bring customers with them.
Anthony Grosso is senior vice president of global marketing and communications at insurance software company EIS