In my last three blogs, we discussed what it means to be a digital insurer and how digital preparedness looks much like a fusion reactor — accomplishing something we called Digital Fusion. For a recap, you can begin with the blogs here. In the November 2017 issue of Canadian Underwriter, I also discussed why Digital Fusion is necessary and what it takes to become a digital insurer. We gave some specifics regarding how digital preparedness meets insurer needs throughout the insurance process. Today we’ll look at how insurers will benefit from Digital Fusion, but we will hone in on growth as a primary benefit — because digital strategies should never lose sight of their focus on growth. Digital Fusion enables growth.
Platform Shifts at the Core of Digital Growth (Systems)
No matter what lines of business an insurance company sells, they are going to want to accept new technologies and data sources into their unique ecosystems. Legacy core systems currently stand in the way. These systems have proven their capability to run traditional business models (Insurance 1.0) and they are mission-critical transactional systems that ensure continuing operations and compliance. However, over time, these systems have generally been cobbled together through expensive, high level and limited integration points. These ecosystem solutions are often originated at different enterprises with different architecture, technology and even data models. Out of necessity, they were “integrated” for positioning as attachments to the primary core system. This may have sufficed to address short-term needs, but the approach falls short in providing differentiated customer experience and deep engagement because the solution will simply be the façade painted over the top of the insurer’s transactional systems.
Rather than a retrofit architecture, the next generation of core is a complete architecture redesign that fuses common capabilities across transaction processing, insights and engagement needs with a strong “find and bind” integration architecture to tap into an ecosystem of innovative data and solutions. It is open to non-native components, supports rapid change to adapt to shifting industry needs and allows for continuous innovation. It can generate analytics and calibrate the customer-centric solution without losing speed or increasing total cost of ownership. That positions the insurer for market adaptability, innovation and most importantly, continued growth.
Speed to Market Growth — Evidence for Agile Digital Connectedness (Innovations)
Part of the fascination of Digital Fusion is an acknowledgement that the sky is the limit and that digital thinking will provide growth through speed.
Let’s look at an example from auto insurance. Vehicles are able to tell us more and more every day. We started with telematics being able to communicate miles driven. Then we added capabilities such as speed, acceleration, and braking habits. Carried to its limit, however, automobiles are mobile data nets. They can know where traffic is, where most accidents occur, how closely cars are following each other and even the temperature outside, including if ice is building on the roadways. Most have sensors that know when impact has happened. Consider all of the data that can be fused into these products and their analysis to provide real-time value as well as operational value. The P&C insurer that can apply all forms of digital content (social media usage, localization, IoT, mobile usage while driving) and also have access to relevant transportation data will be far more liable to be able to price competitively. Add another layer: digital feedback. How can the insurer rewrite daily driving scenarios with simple communications back to the insured in order to reduce risk or to provide value added services? Insurers in all lines of business will be dramatically improving their use of real-time feedback in the coming years.
But that capability is only the tip of the product iceberg. What if the insurer could take that information and roll it into a new usage-based product in a matter of months across all geographies because it is employing a cloud “find and bind” architecture, allowing it to freely use innovations without massive integration work? That is the promise of digital fusion. Traditional platforms can’t keep up with innovation growth. Find and bind architectures facilitate growth through innovations.
This isn’t just a vision of the future. Majesco is currently working with companies that have already implemented frameworks where it is taking “months not years” from product idea to market launch. To view some of those examples, consult the recent Majesco white paper on cloud business platforms.
Big Growth in Smaller Packages (Products and Experiences)
Digital Insurance 2.0 represents a new age of insurance that requires a new way of understanding how digital platforms will affect insurance growth — that much growth will come through segmentation. What does this look like?
- Higher volumes of lower transaction values.
- Personalized service down to the individual level, even if the insurance is sold to groups.
- Micro-duration insurance priced and sold “on demand.”
- Insurance that is so unique in use, that it must use AI to consolidate data, analytics, pricing and underwriting.
- Low-touch operations with a high-touch feel utilizing cognitive communications.
- Much of this is accomplished with a micro-services approach, instead of a core system administration approach.
Digital Fusion will provide insurers with multi-channel engagement, using journey maps, highly-specialized apps and content to face customers with personalized experiences. But then it will go one step further, into usage analysis, so that insurers will be able to use data to measure and tweak processes.
Engagement + Insights = Growth (Relationships)
Digital Apps are known as systems of engagement. Analytics Apps are known as systems of insight. In a digital insurance platform, apps do not operate within silos. They are exposed to each other so they can provide power through digital fusion.
The power that comes through app fusion is specifically related to innovation and growth because it represents cyclical improvement. Insights will fuel new methods and measures of engagement. Enhancements to engagement will create deeper knowledge and expanded growth.
This is important because most insureds (individuals and businesses) want to be known. They trust an organization that they feel understands their needs and is proactive in engaging them. This makes Digital Fusion not only a platform for growth, but a platform for relationship-building. Great relationships will fuel healthy growth and high retention.
Now, when someone asks why the organization should be considering digital transformations, you can say, “Growth,” and share this four-point primer on how digital enhancements are going to yield growth. To recap, digital insurance platforms provide:
- Digitally-capable systems, without the distractions of infrastructure and operations
- The ability to plug in new innovations
- A framework for creating a broader range of products with improved user experiences
- A steady stream of valuable insights that will perpetually provide relationship-building ideas for engagement.
- More profit with a better process
- Lower risk at lower cost while building a future-ready insurance operation
At Majesco, we are reimagining and providing the next generation of digital insurance platforms to insurers within all lines of business. To dig deeper into digital platform transformation, be sure to read Majesco’s thought-leadership paper, Cloud Business Platform: The Path to Digital Insurance 2.0.