Insurance industry has lagged behind other sectors in new tech adoption for many years. However, with the advent of Insurtech and new technology models, the industry is making impressive strides towards digital economy, but the march is not free from its share of challenges.
Traditional insurers are realizing that a widening gap between modern Insurtech and orthodox distribution channels is thwarting their digital success. Rogue silos and growth in IT complexity are preventing traditional insurance carriers from leveraging their technologies and gaining a strategic advantage.
This becomes clear in a recent McKinsey’s report. The report shows that in 2016, insurers spent around $187.3 billion which forms nearly 25.7 percent of financial services. Although some insurance companies have successfully upended their business models, there are many who trail behind. McKinsey believes that nine out of 10 companies identified legacy IT as their biggest barrier to modernization.
Traditional players looking for a short route to success might face challenges in juggling innovations and finding best fit for their use case. Organizations succeeding with Insurtech are those which can make quick changes to their system and switch between different models.
Digital Insurers are harnessing cloud computing and data analytics to better manage risks, cut costs, and improve performance. These technologies are supporting prudence based insurance models with best estimates and value-added actuarial services. Better insurance modeling is helping insurance companies in finding a vantage point between shareholders’ and policyholders’ benefit.
Digital insurers are now able to find the right pace for calculating values, analyzing reports, and delivering tremendous benefits to clients. Their risk calculations have become more precise and accurate. These insurers are in a better position to capitalize their data, give targeted product advice, and close deals faster.
Telematics is another relevant emerging insurance trend. Telematics devices embedded with GPS system, SIM card, analytics software, etc. collects the driving patterns of a lead. It tracks information like: location, crash accidents, driving distances, etc. and moves this data into his personal account. These driving patterns help insurers in creating tailored insurance plans that ensure improved risk management, i.e. usage-based insurance (UBI), pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), etc.
Insurtech benefits are quite clear but traditional insurers still struggle in replacing their core legacy systems. Reliance on outmoded approaches for transitioning can sink their business. Traditional carriers will need start-to-end business data connectivity to efficiently absorb these new speeds into their ecosystem.
Traditional insurers need to find new ways to restructure their enterprise and embrace new technologies with minimum disruption. Many insurance carriers still have fundamentally siloed architectures and enterprise systems on-premise. Their IT ecosystem will need integration to combine new insurance technologies with their own offerings with existing enterprise systems.
IT integration can help insurers in unbundling or repackaging technologies & processes and exposing them as new services. With this advantage, enterprise technologies, products, or services can become easily discoverable and manageable in an ecosystem. Business users can orchestrate services and reuse them on a much faster and broader scale across the service layer.
Adeptia insurance integration solutions have been designed to clear the ground for Insurtech adoption. This solution ensures smoother symbiosis between IT systems, processes, & insurance models and aligns them smoothly with shared digital ecosystem. Transitioning to Insurtech becomes easy as traditional technologies closely collaborate and play nicely with insurtechs. With Adeptia, insurance carriers get the right foundation to simplify, standardize, and modernize their IT ecosystem. Insurance enterprises can adopt a phased approach for modernizing their applications and technology stacks.