A Platforms – first Operating Model in Insurance
Enabling Digital Transformation in Insurance at Speed and Scale
Insurers are facing the threat of disruption from newer entrants from industries such as auto, ecommerce, BigTech, and startup(s) that are vying to take away the market share from incumbents with the promise of faster and newer product introductions. The thinning of investment income due to interest rate stagnation, high insurance penetration in developed regions, emerging risks in areas such as cyber, data on cloud, and digital assets, coupled with rising customer demand for digital touchpoints across the insurance value chain have forced insurers to rethink their operating models. These have accelerated the need for innovation in the insurance industry.
Insurers need to overcome the following challenges successfully by adjusting their operating models to the current business environment:
- High incidence of legacy technology which slows down modernization initiatives
- Siloed business and technology team structures
- Friction in business operations resulting from multiple disparate systems
- Low value realization from investments in data
- Challenges to acquire and retain skilled workforce from the market, and
- Complicated technology and operations sourcing approach
Apart from these challenges, the constantly changing regulatory landscape – recent regulations such as HIPAA, CCPA, and GDPR or accounting norms such as IFRS 17 have created additional overheads and complexities across business and technology for carriers. In this paper, we explore how adopting a platforms-first mindset can help carriers in this transition to remain competitive. The key benefits of platform-based model highlighted are:
- Ability for carriers to modernize their technology in parts as it entails the adoption of a modular architecture
- Digitization of the value chain via a platform helps carriers derive value from data by capturing relevant data at each touchpoint and combine internal and external data to create personalized and compelling customer and agent/broker experiences
- Agility to respond to changing customer needs, launch products faster, do accurate pricing and quoting, and shorten the journey from policy quote to issue for prospective policyholders
- Shift towards a consumption-based model which reduces the need for upfront capital expenditure and creates funding capacity for other projects
Everest Group, a leading global research firm, has published a report that further outlines the ways of adopting a platform-based operating model for carriers. Click here to read more.