Historically the Insurance industry has been slow to innovate, but COVID flipped the script. The innovations that used to set companies apart (Api’s, quote-to-bind, marketing automation, etc.) are now business requirements, and innovation has moved into new areas.
The role of an insurance company is changing. Increasingly, insurance companies are in the business of collecting data about their policyholders and then distributing that data to multiple internal and external stakeholders. Internal stakeholders being actuaries, underwriters, and claims adjusters. External stakeholders being policyholders, agencies, regulators, and TPA’s.
It’s worth exploring what this means to companies and agencies. A focus on data distribution and coordination fundamentally changes the role of the insurance CIO/CTO. A role that has historically been focused on vendor selection and implementation projects is now forced to consider data flows and platform architecture, and it puts enterprise architecture at the center of the equation.
The toolbox for insurance companies going forward does not look like the enterprise architecture of yesterday.
The new toolbox
Instead of monolithic core systems that handle everything, CIO’s and CTO’s are increasingly looking outside of traditional vendors for key capabilities. The services in the toolbox for most insurance companies new include:
- CRM — there’s always a source of truth for the customer, and the CRM is usually it.
- Marketing automation — Hubspot and the like are often used for automated customer outreach, and sophisticated companies are using marketing automation for ALL services (including for claims and billing).
- Quote-to-bind (that’s us!) — You need a way to turn traffic into policies with a great customer experience. Should be able to sell any product you have to any channel you want to leverage.
- Billing — invoicing, payments, endorsement reconciliation.
- Agency management — agency codes and commission management.
- Policy engine — your source of truth for the policy, usually lives inside of a policy system but in reality should be an independent service (stay tuned for some exciting news on this front).
- Certificate management — getting policyholders and others the documentation they need.
- Claims handling — the customer experience to make the best of a bad time for any policyholder.
Now there are a couple of additional items required which every company needs as well:
- API’s — for any company with plans for digital distribution, this is a must. This is your technical front door to the rest of the world, and if it’s impossible to open or non-existent, you should not expect to get in.
- Identity management and authentication — to connect all of these components, there is a layer of identity that every company has to own somehow. In order to create a cohesive user experience across all of the other services, this is key.
- Analytics and data lake initiatives — with multiple services comes the challenge of bringing all of that data together in a usable format. This is they key to unlocking the latent potential in all of the data being collected. There are some incredible new tools.*
* This is especially interesting because there is so much room for disruption insurance that comes with free and open data flow.
The build-or-buy ship has sailed. Very few companies have an appetite for building large pieces of software internally, even fewer are successful at it. There are exceptions, but they are typically niche carriers or new MGA’s who are starting with a green field. Prebuilt components will provide richer data, a better experience, and infinitely faster time-to-market than something built in-house, when that’s possible.
Technical experts at carriers and agencies are being forced to quarterback a platform architecture and strategy, selecting and then connecting the dots.BUT… can they?
A platform is the wiring for all of these capabilities. The identity management and authentication, authorization, and the data all make up the infrastructure, the substrate upon which microservices are wired together, and then user interfaces are placed on top of them.
Many companies now are focusing their technology groups on selecting these core components and then quarterbacking the process of plugging them in.
The most advanced companies, at least within insurance, are also developing some of their own specialized services–typically to support differentiation within their market niche.
Hopefully, if you’re in the insurance industry, you have a plan for this that you’re already executing on. If not, you should talk to somebody who’s already doing it.
But if you are, the future is exciting. This all leads to composable business models… up next!