To say that the pace of change in the technology world has accelerated would be a cliché, but that does not make it any less true. Spotting the latest IT trends is a bit like trying to spot lightning; for insurance companies, it is probably best to wait for the thunder before acting.
However, there are two trends that I believe will shape insurance technology and insurance companies for the next few years, ones for which digital insurance enterprises must be prepared
Insurance at the Edge
The first trend is what I call “Insurance at the Edge”. As digital technologies take hold, and as the internet of things (IoT) explodes from a trend to a pervasive reality, the “edge” of the network, the part touching the customers, will become more important. This may not seem like a truly revolutionary change, but from an architecture perspective, I see that most solutions for insurance assume a certain data flow, namely edge to core.
What I mean by that is that the solutions assume there is a centralised, core data centre somewhere from which key services are delivered. This type of architectural view crosses almost every imaginable service that is deployed in insurance technology, including security, mobile applications, policy administration systems, point-of-sale systems and others. The problem is that the world is very rapidly shifting away from this model.
For example, many publicly facing services that insurance companies provide are now hosted by cloud providers such as AWS or Microsoft Azure.
In addition, many of these services rely upon data that is stored in a company-owned data centre, for example, the core policy administration system data store. Further, there is an intelligence built into the mobile application (for instance) that allows it to work offline or at least without a consistent connection.
Trying to diagram the data flow in this type of deployment is extremely difficult. For purposes of service management and security, insurance organisations and their IT providers need to capture and model that data flow. This often leaves insurance companies at a loss for how to measure, manage or even deploy digital services because their assumptions about edge-to-core data flow are no longer valid.
The key to untying this knot is to recognise that in modern architectures, the network is at the centre. Data centres, whether they be a cloud provider’s or your own, are simply endpoints at the edge just like customers’ mobile devices. The data flow associated with these services needs to be modelled dynamically as technologies such as software-defined networking (SDN) become more pervasive. And what is most important, the tools that insurance companies use for service management and security need to respond appropriately to these dynamic models. Beware of the edge-to-core assumption. It is pervasive and dangerous to your digital transformation.
The second trend I see emerging in insurance technology is the blurring of lines between businesses that exist within the insurance ecosystem. This is a very long-term trend; insurance companies have been working with partner organisations to help sell and deliver services for many years. In the past, there were distinct demarcations between what was in the insurance domain, and what was in other domains.
As insurance technology continues to mature, these boundaries and demarcations are becoming more a thing of the past and less clear. Business domains such as healthcare and manufacturing are becoming a deeper part of what was traditionally considered the insurance domain; at the same time, insurance enterprises have begun to expand their domains into areas traditionally reserved for other types of enterprises.
For example, we have worked with our healthcare customers to find ways to capture data regarding their patients’ insurance policies and restrictions. This makes for more efficient registration and better financial outcomes for both the patient and the insurance company. What we have found is that sometimes this data capture is pushed by insurance organisations, and sometimes it is pulled by healthcare organisations. The process does not clearly belong to either domain, but falls somewhere in the middle. As a result, the boundaries between these domains begin to blur even more.
Another example would be that more car manufacturers are instrumenting their vehicles using IoT devices. While these devices provide telemetry for purposes of car maintenance, they can also be used by insurance companies to provide usage-based insurance (UBI). If an insurance company begins to finance the implementation of IoT in these vehicles, does the insurer become part of the auto company’s supply chain? Does it become a manufacturer? Or is the auto company getting into the insurance business by providing a UBI capability?
The larger point is that these are not questions worth answering. While they pose some dilemmas and complications for insurance companies in defining what your core business is, they also provide routes to monetisation that have never been open before. Perhaps at its core, this is what digital is all about: finding new routes to monetisation by overcoming previous restrictions.
Design for transition
What advice would I give to CIOs concerning these changes? First of all, design for transition, whether you are designing your organisation, your network, your security or your data centre. Whatever you prepare, assume that it will need to change in the next three years, and probably before that.
This means committing to open platforms wherever possible, deploying vendor-agnostic architectures and, in general, keeping your options open. The greatest hindrance to digital adoption is technical debt — legacy systems that have not been designed to change. Make sure you are not part of the problem your company will have in the future.
Second, I would recommend a bit of soul-searching regarding what the IT organisation you manage ought to be doing. Once upon a time, this was a more straightforward proposition. Often I would hear, “IT is not our core business; hence, we will outsource.” Now, with the digital revolution upon us, IT is in fact the core business, or at the very least a key component of that core business. This means that the decisions regarding outsourcing, partnering, strategic supplier management and many others have become very complicated.
Spend some time thinking about the functions that you believe your IT team should be responsible for, then compete in the market to be the best at those. For the things you believe are not differentiators for your team, find a way to make others responsible, while still managing the architectural plan. After all, you still need to design for transition, no matter what your team is doing.
The insurance technology world is an exciting place to be right now, in both the best and worst ways. To navigate change, you must see it coming and you must be able to react. Take comfort in the fact that most other companies are facing the same challenges; however, take heed because some companies have overcome them. It is time to get out in front! A
Mr Daniel Angelucci is the chief technology officer for the Asia, Middle East and Africa region at DXC Technology, which was created by the merger of CSC and the Enterprise Services business of Hewlett Packard Enterprise. DXC enables insurers to build a digital future while transforming their legacy businesses. For more information, visit www.dxc.technology/insurance.