Being customer-centric, not policy-centric, is the future of insurance. Consumers want fingertip access to information, once-and-done interactions, personalised experiences and tools that let them analyse and purchase products through a variety of channels. This consumerisation – combined with the influx of new industry entrants, the data revolution and exciting digital technologies – is driving disruptive change in the industry. DXC Technology’s Phil Ratcliff and Brian Wallace provide some insights.
Recognising the drivers is easy. The key to success lies in knowing what to do about them and how to do it. Speed and quality of execution distinguish leaders from laggers, and insurers that effectively leverage outside-in innovation are those with the advantage.
Many insurers feel stuck with one foot in the old world and one in the new, unsure how wholly to remove themselves from the past. Historically, they’ve looked inward for answers. Today, they’re tapping into experiences in other industries, the fast-growing InsurTech community and the new digital commons.
Insurers adopting this outside-in perspective are shifting focus from:
- Product-centric complexity to customer-centric simplicity
- Data capture to data analytics
- Individual insurer offerings to an ecosystem of products and services
- Legacy solutions to new digital insurance platforms that are consumed as a service rather than built
The first step toward simplicity is streamlining the business and IT landscape – determining which assets to drop, which to hand over to partners for ongoing stewardship and which to keep in house.
The next step is embracing other forms of simplification: Offerings that are easy to understand and purchase, intuitive user experiences, and convenient self-service capabilities.
To do this, insurance leaders are investing in platforms that enable the full spectrum of customer experiences — including direct sales and omnichannel engagement — and treating channels and partners as a continuum rather than discrete activities.
To transform the quote-to-buy experience, accelerate new product development and enable retail-like best practices without modifying core administration systems, some insurers are using external software workbenches and rating engines to define products and determine pricing. Soon buyers may even be able to configure their own risk solutions, selecting from a discrete set of products and riders, aggregated and priced as a single offer.
Business process services offer another route to simplification. Life insurers are often saddled with outdated policy administration systems for runoff products that are no longer sold but must be administered. By moving some people, processes and technologies to an external business process service, the insurer can reduce costs, improve agility and free up embedded capital. In addition, analytics and emerging technologies like blockchain are automating business processes, adding self-service capabilities and enabling economies and insights.
Insurers have been collecting and managing data for years without realising its full potential. The petabytes of customer information carriers maintain are spread across different systems, lines of business and geographies like so many scattered puzzle pieces. And there’s no way to assemble them into a full picture.
Today insurers are beginning to leverage this information and deploy data-driven practices and analytics to connect with customers more intimately, guide buying journeys and operate as quantitative organisations. They are:
- Shifting the focus of customer relationship management and analytics from intermediaries to policyholders and prospects
- Digitising and retaining all available data, and augmenting transactional insights with information from partners and external providers
- Investing in robust data and analytics platforms to drive sophisticated machine learning algorithms and AI engines
- Using digital engagement platforms to push information and insights to the edge of the enterprise – into the hands of people at key decision and interaction points
Armed with these new insights and tools, insurers are having more personalised, meaningful conversations with customers about their broader needs, rather than simply completing a transaction.
Broad partner ecosystems
Leading insurers are looking beyond their own boundaries for innovative new products and services. They are promoting customer wellness, safety and peace of mind; offering advice about products and preventive measures; providing education and feedback; and finding new ways to decrease risk.
To do this, they’re curating entirely new ecosystems of partners and services, consuming capabilities from adjacent industries, technology giants and nimble InsurTechs. Originally conceived to reinvent the insurance industry, many InsurTechs now partner with established firms, helping them incorporate fresh approaches like internet of things smart monitoring for connected home insurance protection or facial recognition for setting life insurance rates.
While no company can afford to wipe the slate clean and start over, insurers are progressively decomposing their existing monolithic systems and moving toward third-party components and services that can be reassembled into a loosely coupled, consumption-based IT platform. They are rationalising and divesting capital-intensive data centres in favour of virtualised clouds and software-defined infrastructures, increasing business agility and freeing up capital.
Digital insurance platforms
Systems of record have been the cornerstones of insurance companies for decades, providing the operational backbone and data repositories that underpin the end-to-end value chain. While the need for these capabilities remains, they’re no longer the entire story. Customer experience, actionable insights and ecosystem services have taken the spotlight.
By deploying a digital insurance platform that focuses on the needs of a distinct persona – such as a customer, broker or adjuster – insurers are moving toward secure, scalable, extensible, data-driven, agile and omnichannel systems.
An effective digital insurance platform has four major business and IT elements:
- Persona-based insurance application development addresses the functions, information, insights and services the key personas need and how they want to interact. This means insurers continually package and deliver personalised systems deployable across both traditional and digital channels, tailored to each persona’s changing needs.
- The new digital commons is providing insurance-specific tools, technologies and architectures. APIs enable consistent and dynamic conversational interactions across systems and API service providers. They adapt processes – requesting a quote or reporting a claim, for example – to the diversity found in most insurance back offices and their newly curated partner ecosystems.
- Digitally enabled core services represent an ever-expanding set of consumable capabilities. Whereas a single system once supported specialised task workers, today an increasingly broad array of value-chain components, analysis systems and ecosystem platforms and services enable a range of digital personas.
- Platform operations, often deployed in the cloud for maximum agility and ease of integration, take full advantage of rapidly industrialising approaches to IT service management and operations. Automation, orchestration and embedded intelligence provide the foundation for self-service provisioning, continuous integration, root cause intervention and advanced security monitoring.
Ready to go
In the end, digital transformation and customer-centric engagement rely on trusted partnerships. Insurers can no longer expect to keep up with the massive investments being made by today’s technology leaders. Neither can they amass all the skills and experience necessary to effect disruptive change at the pace business requires. Streamlining the existing landscape and embracing a digital platform through outside-in innovation lets insurance IT leaders focus resources and investments on creating compelling customer experiences and products, which undoubtedly can lead to growth.
Digital technology is mature and ready to be deployed at scale, and well-documented in other industries. For insurers, all that remains is to decide where and how to move forward, and to get started. A
Mr Phil Ratcliff is vice president and general manager, Global Insurance, DXC Technology. Mr Brian Wallace is vice president, Global Insurance Software Build, DXC Technology.