The need to modernise insurance systems

The need to modernise insurance systems

HARARE, Shifting customer expectations and the need to replace aging systems are contributing to insurers’ decision to modernise their environments and become more adaptable to the digital needs of the market today. Lee Kuyper, COO at SilverBridge, examines the process this will likely entail.

“Insurance is not a modern industry, with many companies having been around for a long time. As technology has evolved and as new insurers, not limited by legacy solutions, have entered the market, the incumbents have had to embrace the possibility that not only their systems, but also their business models must change. Consumer behaviour is radically different with technology becoming an integral part of people’s everyday lives,” he says.

The reality is that systems can only enable a good customer experience within the context of an optimal business model, but having a modern platform make this possible. Legacy systems have limitations when it comes to integrating with modern front-end systems such as the Web or a mobile app. In addition, it is typically not easy to access data from traditional insurance systems, often with disparate databases, in a way where it can be leveraged to better understand the customer and manage the business.

“Insurers who still rely on hosting systems on-site, open themselves up to significant risk when it comes to being dependant on their own infrastructure and skills. They also lose out on the opportunities that cloud platforms provide. While there are effective ways of moving legacy systems to the cloud, they will remain constrained in terms of their ability to access and integrate into the numerous functions and systems available.”

Business-driven change

Modernising a core insurance system is not a simple task and should never be approached without the necessary support from the business at the highest level. It also provides an insurer with the ideal opportunity to modernise its business overall.

“Even with the buy-in from leadership, modernising an insurance system remains a daunting prospect. If attempted as a single ‘rip-and-replace’ project, there is a high risk of failure. Rather, by identifying a single product to modernise, the probability of success increases exponentially. This solution can then be used as a basis to provide the basic capability needed to operate in a more modern way,” adds Kuyper.

He says that once this is achieved, other products can be migrated to the new system. At the same time, the initial solution can be continued to be optimised.

“Optimisation should not be driven from or limited to boardroom discussions. Instead, the business must examine how it operates and how customers respond to the new solution and use that as further input into what additional optimisation is required. Often, this approach highlights the importance of what at face value might appear to be trivial things but are important to the customer.”

Gaining a return

By modernising their core systems, insurers can take the first step to digitalisation and intelligent process automation. These initiatives are only possible to the full extent once a modern backbone is in place. By unlocking the benefits of digitalisation, an insurer can achieve improved policy-holder experience, increase new business policy volumes, and ensure improved retention of existing polices.

“In addition, business operations can be optimised for efficiency gains, and the insurer can better manage risk and ensure regulatory compliance. Internally, staff will be more motivated as they are able to become more efficient and effective in their jobs. Like consumers, employees have also gotten used to modern systems and apps in their daily lives. Modernisation is therefore critical to the success of an insurer as it seeks to continually deliver value to customers,” concludes Kuyper.Silverbridge Blog