The thrall of insurtech and its possibilities for innovative customer experiences, product development, and emerging business models continues to have a firm grip on the imagination of P&C insurance industry players.
But now we see insurtechs challenged by such unwieldy tasks that they cannot go it alone. They’re part of an ecosystem. And the industry needs something different than what’s come before if it wants to enable a digital insurance ecosystem fully.
Fortunately, a new class of technology — called coretech — is emerging to fill the void.
Armed with consumer technology and always-on connectivity, people are continuously exposed to highly personalized and data-driven experiences. Leveraging the power of data, the companies they do business with “know them” and act like it. They know their locations, purchase histories, and communications preferences and offer empathetic customer experiences — experiences that insurers are only beginning to deliver.
Sensing the opportunity to improve repetitive tasks and transactions, insurtechs have flooded consumer and technology markets with telematics, wearables, and AI-driven solutions, like chatbots, object recognition, biometrics, and virtual assistants to create friction-free customer experiences and new customer-centric business models. They’ve also pushed innovation in distribution and customer engagement to sell policies – policies that would be serviced on their own limited policy admin systems or on the insurer’s modern legacy system.
But nothing’s that easy.
When insurtechs meet insurers
Encounters between insurtechs and insurers tend to be strained, starting with the friction between “startup culture” and the more deliberate risk-averse insurance culture.
Insurtechs bristle at plodding vendor onboarding and procurement processes. Despite high aspirations and the best of intentions, it takes 12 months on average to get these initiatives into production, according to Aite-Novarica. Even then, incentives and traditional hierarchies can prevent innovation from taking root.
Insurers frequently find that insurtechs are not built to support very-high premium volumes. I’m looking at you, Desjardins, with more than 30 million customer records and 2.5 million digital transactions per day in sub-second response rates. Further, their insurtech partners often lack experience with insurance systems, processes, and integrations. The challenges only increase from there.
The contemporary insurance core systems dominating the market for the past decade were not designed with the microservices, APIs, and flexibility needed to support insurtech and emerging business models. They are, in effect, “modern-legacy systems.” Sure, some of these systems have been lifted and shifted into the cloud, but they must be re-engineered to participate in digital insurance ecosystems fully.
For many insurers, that’s unsettling. And it should be. To deliver the digital customer experiences and open ecosystems users now expect, many insurers face an upgrade path so demanding that a complete core systems replacement seems preferable, especially given continuously evolving expectations around the customer experience.
Insurtech needs coretech
Everything in the new digital insurance ecosystem — from services and product offerings to solutions and capabilities — is integrated to support customer experiences.
Insurtech vendors offer innovative capabilities, but many rely on the scalability and functionality of insurance core systems. 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 need to re-create the functionality found in modern-legacy systems.
Coretech has evolved for the specific purpose of enabling ecosystems.
What is coretech?
Simply put, coretech is the logical combination of insurance core systems with the cloud-native technologies and architecture pioneered by Alphabet, Amazon, Apple, Meta, and Netflix. What’s important is that it easily consumes insurtech and data in all forms, joins digital insurance ecosystems, and can serve as a hub to deliver vastly improved customer experiences.
In its design and delivery, coretech differs from monolithic and modern legacy core systems. It shares the DNA of insurtech. It’s architected with microservices, APIs, and event-based workflows 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 and Agile methodologies for rapidly delivering 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.
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