Executive Summary: ISG Provider Lens™ Insurance Platform Solutions - APAC 2024
12 Jul 2024
by Ashish Jhajharia
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The cost of maintaining ageing, legacy core systems and the risks surrounding their support services and resources are too high.
The inherent complexity of core systems and insurance operations should not serve as a deterrent to insurers seeking to undertake digital transformation initiatives. While the insurance industry is known for its intricate business processes, such complexities should be viewed as an opportunity to reimagine newer business models.
Insurers should recognise the potential gains that can be realised by adopting modern core systems and utilise them as an operational backbone capability to drive innovation. By leveraging the power of digital transformation, insurers can streamline their operations, improve policyholder experiences (PX) and generate new revenue streams. Therefore, insurers must embrace a forward-thinking mindset and take proactive measures to transform their operations, even in the face of complexity.
Core systems represent the most intricate systems in the world’s most convoluted business.
The question of whether insurers should transform their core systems is not one of if but rather one of when. By responding promptly, insurers may achieve benefits that will enable them to move forward with a competitive differentiator.
Yet, the complexity inherent in these systems is not a barrier but rather an opportunity to reimagine insurers’ future on a foundation that is optimised for rapid, safe and sustainable transformation. Such transformation can be achieved by identifying and adopting new methodologies, such as Agile, DevOps and cloud computing, which are ideal for the increasingly complex and dynamic insurance landscape. By embracing modern, robust and scalable core systems or policy administration systems (PAS), insurance companies can realise significant improvements in their ability to deliver value, enhance policyholder satisfaction and increase their bottom line in a much more sustainable and cost-efficient manner over a period of time. It is essential to recognise that complexity should not be viewed as an insurmountable obstacle. Instead, it is a chance to embrace change and innovate in ways that enhance business operations and policyholder journeys and drive businesses forward.
Benefits of Core System Transformation for Insurers
Transitioning from legacy systems to contemporary solutions can provide numerous advantages, including enhanced efficiency, superior customer experience (CX) and strengthened security mechanisms. By upgrading to modern solutions, insurers can unlock the full potential of operations, streamline processes and optimise resources. Such upgrades can lead to improved productivity, better decision-making and, ultimately, increased profitability. Furthermore, modern solutions are designed to be scalable and adaptable, allowing businesses to stay ahead of the competition and respond quickly to changing market trends. In sum, transitioning to modern solutions is a smart investment that can position clients’ businesses for long-term success.
Methodical Approach to Core System Transformation
The process of modernising outdated systems is a complex undertaking that demands a well-coordinated effort. Identifying the key stakeholders involved, prioritising the most crucial systems and managing change effectively are the key pillars that underpin the success of a core systems modernisation journey. To achieve this, it is essential to have a clear understanding of the objectives and requirements of the modernisation effort, as well as a comprehensive plan that outlines the specific steps involved in the process. It is also important to have a robust communication strategy in place to ensure that all stakeholders are kept informed and engaged throughout the modernisation journey. By adopting a strategic and methodical approach to modernising outdated systems, organisations can unlock the full potential of their operations and gain a competitive edge in the marketplace.
Increased Business and Operational Effectiveness
Modernising legacy systems can yield significant benefits for businesses by reducing manual processes and streamlining workflows. Such benefits may include cost savings and increased productivity. Additionally, modernised infrastructure can facilitate automation in insurance processes such as claims processing, underwriting and risk assessment. This automation can lead to faster turnaround times, fewer errors, reduced operational costs and improved overall efficiency. It is imperative for businesses to consider the advantages of modernising legacy systems to keep pace with the ever-evolving technological landscape. Such an approach can help to future-proof operations, increase competitiveness and improve CX. Therefore, it is recommended that businesses undertake a thorough analysis of their existing systems and assess the potential benefits of modernisation to determine the most effective course of action.
Innovation-led Business Growth
Insurers face various challenges when trying to update their outdated legacy systems. However, it is crucial to do so to ensure future success. Some companies are adopting a strategy of layering new technologies over legacy systems using APIs to streamline processes and stay ahead of the competition by offering new services and experiences. Modernising core systems is critical to gaining new digital capabilities and business prospects. For carriers that are unable to transform all at once, other possibilities include using a hybrid strategy or utilising low-code or no-code platforms. It is widely recognised that digital experiences are now a part of everyday life, and life insurers must accept this fact to continue modernising key systems. Prioritising product innovation and investing in next-generation technologies to meet customer demands is essential.
Data Optimisation and Datafication are key
Contemporary insurers benefit from deploying cutting-edge core systems, which allow them to harness the full potential of data optimisation across the insurance value chain, drawing on it to make informed decisions and develop innovative products. These systems enable insurers to access, analyse and synthesise policyholders’ data from multiple sources, thus paving the way for the creation of superior products and services that meet customers’ unique needs. Datafication empowers insurers with data-driven insights to identify and respond to emerging risks and opportunities, enabling more informed decisions and, ultimately, enhancing their bottom line.
Improved Policyholder Experience
The modernisation of the insurance sector has the potential to deliver customised and seamless experiences to policyholders through digital channels. Insurers can leverage advanced technologies to offer innovative features such as real-time claims processing and policy administration, minimal turnaround time (TAT) and optimal policyholders and value chain partner interactions. By embracing cutting-edge technologies, insurers can streamline operations, reduce costs and enhance the overall CX. Digital channels allow insurers to offer personalised, real-time services to their customers and partners, thus enabling them to build stronger and more profitable relationships. To stay competitive in the rapidly evolving insurance industry, insurers must continue to invest in technology and innovation. By doing so, they can differentiate themselves from competitors and deliver superior value to policyholders.
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