Coretech (finally) lets insurers leverage InsurTech innovation
In the new digital insurance ecosystem, everything — from capabilities and services to product offerings — is connected to the customer experience.
The thrall of InsurTech and the possibilities it presents for innovating customer experiences and products and supporting emerging business models has had a firm grip on the imaginations of P&C insurance industry players.
But now, we are seeing that InsurTechs are challenged by such an unwieldy task and cannot go it alone. They are part of an ecosystem. The industry needs something different than what’s come before if it wants to fully enable a digital insurance ecosystem.
Fortunately, a new class of technology — called coretech — is emerging to fill the void.
Armed with personal technology and near-ubiquitous connectivity, customers are continuously exposed to highly personalized and data-driven experiences. The companies they like to do business with “know them.” They know their location, their purchase histories, their communications preferences, and they offer almost-empathetic customer experiences — experiences that insurers are only beginning to consider, much less deliver.
Sensing the opportunity to improve frustrating and repetitive tasks and transactions, InsurTechs have flooded the consumer and technology markets. They’ve pushed innovation in wearables and telematics, as well as AI-driven solutions, like chatbots, virtual assistants, object recognition, and voice biometrics, attempting to create frictionless customer experiences and new, more customer-centric business models.
But nothing’s that easy.
What happens when InsurTech meets incumbents?
The encounter between insurers and InsurTechs has been strained, starting with the friction between “fast company” startup culture and the slower, more risk-averse insurance culture.
InsurTechs encounter cumbersome vendor onboarding and procurement processes. Despite their best intentions and high aspirations, it takes an average of 12 months to get these initiatives into production, according to analyst firm Novarica. Even then, traditional hierarchies and incentives can prevent innovation from taking root.
Insurers find that InsurTechs typically are not built to support very high premium volumes. What’s more, their InsurTech partners often lack experience with insurance processes, systems and integrations. From there, the challenges only increase.
At the same time, the “modern” core systems that have dominated the market for the last dozen years simply were not designed with the microservices, APIs and flexibility necessary to support InsurTechs, emerging business models, and digital insurance ecosystems. They are, in effect, modern-legacy systems. Sure, some of these modern-legacy systems operate in the cloud, which is great. But it doesn’t change the fact that many need to be updated, or even re-engineered, to easily participate in the new digital insurance ecosystems.
That’s unsettling for many incumbent insurers, and it should be. The upshot: To deliver contemporary digital customer experiences and open ecosystems, many insurers face an upgrade path so onerous that wholesale replacement of their core systems seems preferable, especially given that customer-experience needs and expectations continue to evolve.
Why InsurTech needs coretech
In the new digital insurance ecosystem, everything — from solutions and capabilities to services and product offerings — is interconnected to support the customer experience.
InsurTech vendors can offer innovative capabilities but, for the most part, rely on insurance core-system scalability and functionality. Even the InsurTech-based insurers that have built their own digital insurance platforms have stumbled when pressed to scale up, and many have struggled when faced with the necessity to re-create the functionality found in modern-legacy systems.
Insurance coretech has evolved for the specific purpose of enabling ecosystems.
What is coretech?
Put simply, coretech is the logical combination of next-generation technologies and methodologies, mostly pioneered by big tech, with insurance core systems. What’s important is that it easily consumes InsurTech and data, in all their forms, easily joins digital insurance ecosystems and can serve as a hub to deliver vastly improved customer experiences.
In its design and delivery, coretech is different from monolithic and modern legacy core systems. It shares the DNA of InsurTech. It’s architected with the microservices, APIs and event-based workflows necessary to support easy integration with InsurTechs and third-party data and services providers to support emerging business models. And because coretech is cloud-native, it leverages the cloud’s on-demand, scalable and secure infrastructure, along with Agile approaches, and DevOps methodologies, for the rapid and continuous delivery of new business capabilities.
Coretech mirrors the next-gen architecture of InsurTech, so it’s fully open to the digital ecosystem and easy, real-time integrations. It also offers the deep functionality and enterprise scalability borne of its origins in the insurance enterprise.
The customer has to be at the center of coretech. The coretech manifesto is to provide unified transaction processing, a smart, AI-driven customer relationship management with a full 360-degree customer record and engagement history, and persona-based customer experience tools. Together, coretech and InsurTech provide all the juice insurers need to orchestrate the capabilities to engage customers, how and when they want, within the ecosystems they spend time in.
Tony Grosso (agrosso@eisgroup.com) is senior vice president and head of marketing and communications at EIS Group, a core and digital platform provider. Grosso also is the author of “When InsurTech Meets Coretech, the Customer Wins.”
These opinions are the author’s own.
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