For today’s insurers, the list of challenges is unrelenting: Evolving consumer demands. Regulatory compliance issues. An endless onslaught of technological developments. In the face of all this, business transformation has become crucial to remain competitive and efficient.
That is why insurance platform modernization (IPM) has become such a hot topic. IPM refers to the transformation and upgrading of insurers’ legacy systems and business processes to better serve customers, adapt to market changes and harness new technological advancements.
What drives insurance platform modernization? From what we’ve seen recently, insurers get on the IPM train to achieve one or more of three primary business goals:
1. They want to automate manual employee tasks
To attract and retain talented people—knowledge workers, call center personnel, claims handlers, underwriters—today’s insurers realize that they must make work easier. When processes are still manual, people become frustrated. Productivity suffers, and so do margins.
If you want to recruit superior talent, you must offer superior tools for that talent to work with. Those tools should necessarily digitize repetitive, low-value tasks, so that people can focus on more high-value activities. The engine to effect that manual-to-digital transformation: IPM.
2. They want to offer real-time customer UX/self-service
Today’s insurance customers want the same thing as any other customer: an easier way to transact. They don't want to call and spend time on hold; they want self-service on an online portal. They also want you to intuitively understand what they want, where they’ve been and what they’re doing—for example, they’ve just put in a first notice of loss—and make sure you're bringing it through the next steps.
Already, your competitors (especially nimble startups) are making the customer experience faster and easier, gaining a leg up on the rest of the field. To avoid falling behind the CX curve, insurers are turning to IPM to enhance their customer service—and customer self-service.
3. They want to reduce operating costs
The aforementioned agile startups—unburdened by decades of legacy mainframes or highly customized software—are coming to markets large and small with solutions that are cheaper and faster than traditional stalwarts. The cloud isn’t where they’re going, it’s where they’re starting. To compete with these nimble newcomers, insurers must reduce costs and come in at comparative price points. So, they’re focusing intently internally—that is, on OpEx—to reduce costs.
IPM is the means to that end. Using IPM, insurers can modernize their operations and call centers, make the claims process more accurate and efficient, and enable their underwriters to write profitable risk. By doing all this, they can reduce costs and be more competitive.
Speaking of cloud migration…
One thing that should not drive insurance platform modernization is a technology directive. Rather, business transformation—and the IPM that fosters it—must start with a business discussion, identifying strategic business goals (like the three above) rather than technology goals.
If your strategy discussion begins with “how many applications can we move to the cloud” or “what can we lift-and-shift,” then you’re merely moving your data center from on-premises to the cloud. You’re doing IPM wrong, and you’ll likely be disappointed with both the low ROI and high costs. So, to repeat: Only once your business goals have been established should a technology discussion begin.
Similarly, your budgeting should be business goals led. Instead of establishing an annual tech budget, then deciding which business strategies can be addressed by it, turn that formula around. Establish business strategies upfront, then create the tech budget that meets those needs. The driving force behind migrating to the cloud is to achieve the business goals to drive your business forward.
How, then, to succeed? Establish your business objectives for insurance platform modernization, then build your technology strategy and budget to meet those goals. That’s a key to successful IPM.
To learn more on how to modernize your insurance platform to advance your business, visit the Insurance Platform Modernization section of our website or contact us.