Electronic devices consume our lives. The extension of wifi-enabled "smartness" into all manner of devices has turned even a basic doorbell into a legacy system.
These rapid advances in technology often put domestic and professional lives out of sync. Many of us will recognise greater utilisation of technology in our personal lives. Landlines, printers and the humble computer mouse are all a regular part of our office lives, but obsolete in our own homes.The insurance industry is helping push these new devices, as they are eager to feast on the data bounty they provide. Whether this is to enable new coverages, switch towards real-time pricing, or mitigate risks the industry has been quick to realise the benefits of the technology revolution.
The paradox is that many insurance companies remain in hock to legacy platforms that are more mainframe than smart tablet. Entire ecosystems spring up around these systems, providing piecemeal improvements - a web workflow here, an ETL there – often in response to individual crises. These help push back the day of reckoning, but also add complexity to maintenance and of course replacement, which further disincentivises change.
For those of us in the insurance industry, the gap between our technology expectations in the domestic sphere, and what we accept using in the office is large and growing. It is a sobering thought that the user experience for the individuals processing insurance would be absolutely unacceptable to the same individual when they come to purchase their own insurance.
As insurers look to address these issues and the challenge of tech-focused start-ups with no legacy, there are 3 key considerations that organisations and individuals have when toying with the idea of change.
If in the past, there has always been a reason why replacing legacy systems could be kicked into the long grass, this no longer applies. It will be increasingly difficult to compete in a fast-paced and rapidly growing global marketplace with outdated systems. Whether delivering Life insurance quotes with a selfie or delivering real-time pricing, the complex processing required to navigate a world of data and deliver efficient processing requires modern systems.
A push to replace legacy can often come up in response to a specific issue making it high-profile: international cyber-attacks, data breaches or weather conditions may create initial panic and a need for more robust and efficient systems, that dies away when the crisis passes.
But with more than 2 million data breaches in February 2018 alone, there doesn't need to be a high-profile problem to justify investment – the base rate of concern is still high!
Often, a sticking plaster is attached in times of crisis, leading to complacency when the storm calms and the system seems to work fine again. There are two stand out reasons why resistance often occurs:
1 - Legacy core system have not yet reached breaking point
2 - People are comfortable with what they are accustomed to
Waiting until a system reaches "burning platform" status is a recipe for poorly designed, rushed selection processes and replacement programmes. If the piecemeal fixes have one advantage, it is in buying time to do replacement properly.
As for comfort in what we know, returning to point of domestic vs professional technology – in the last decade we've embraced smart phones, tablets and streaming; robots hoover our floors and we can answer the doorbell when we're not at home. It's not the workforce who don't want to embrace technology.
The benefits of modern technology to the insurance industry are endless.
In distribution, risk management/mitigation and pricing, technology has taken the carrier ever closer to the customer. At the same time, it has enabled an explosion of data to enable better decision making – whether in underwriting, claim handling (fraud detection) or business processes.
Additionally, AI and machine learning provide opportunities to use that data better, whether to drive automated efficiency improvements, make better financial forecasts, or change reinsurance purchasing requirements.
As technology continues to drive Insurance evolution, updating your legacy system and investing in a fully integrated solution capable of delivering operational efficiency, performance indicators, and management information is crucial to maximising the opportunity while minimising competitive threat.