'Coretech' Can Help Incumbents Compete

"Coretech" addresses issues with legacy infrastructures, which were designed to be product-centric, and allows for a focus on the customer.


Digital transformation initiatives are accelerating because of the pandemic and the mandate to “go digital.” Even more important are the changing expectations of insureds, particularly millennials, who have grown accustomed to receiving products when, where and how they want them. Even boomers have these very same expectations. 

Given that digital technology is driving nearly every major industry, it is a wonder that it has taken so long to garner a foothold in insurance. The simple reason is that the insurance industry didn’t have to. Everyone was on the same page. There was no risk of falling behind.

But that was then, and this is now.

Today, insurers must continuously align with where consumer interest and appetite are tracking, modifying organizations and resources to the quest without losing sight of ease and simplicity. As the insurance sector frantically tries to make up for lost time, those insurers that will win the future will be those that deliver an Amazon-like experience for the customer. 

This goal may prove difficult, however, as many incumbent carriers are NOT focused on the customer. Ironically, many multi-line carriers operate as multiple single-line carriers because they do not look at the customer as a channel. A number of industry upstarts, however, have stepped in to fill this void. Lemonade, for example, has been able to expand its portfolio quickly and bundle different policies using modern technology.

By packaging up a suite of insurance products in a simple, comprehensible way, insurers will find themselves in sync with what customers really want: simpler, one-stop shopping, with easy, omnichannel buying journeys. Customers are difficult and expensive to acquire, so retention is all too important. Our research shows that the greater the number of policies a policyholder has with a single insurer, the greater the loyalty and the lower the churn. The more an insurer can meet a consumer’s diverse needs in a simpler way, the more recurring revenue the insurer will derive from each customer – even to the point of becoming their sole insurance provider. 

There is a huge opportunity for insurers to design products and solutions that not only protect health, wealth and risks but work with people’s lifestyles to prevent injury or loss and the subsequent claim. For insurance providers to be able to make the most of these opportunities, they must adopt more customer-centric business models – and that means addressing issues with their legacy infrastructures, which were designed for a product-centric approach. The insurance industry of tomorrow will be more than just a product; it will be an experience. 

See also: Tomorrow’s Insurance Is Connected

With the technology that has been used by insurers for decades, and even with many modern legacy core systems deployed just a few years ago, it is impossible to add a usage-based or episodic insurance product. It is equally difficult to sell a bundle of different types of insurance products in one go or bundle insurance and non-insurance products to add unique value. Those modern legacy systems were designed for a more traditional era of insurance. They served their purpose for yesterday, but tomorrow will be quite different.

To be competitive in the modern market, insurers must adopt cloud-native, microservices and API-rich insurance platforms. These new technology platforms for the future of insurance, called coretech, bring together the core operational and digital insurance capabilities needed to support emerging business models and leverage insurtech innovation and data for growth in emerging B2B and B2C ecosystems.

At EIS, we have embraced the ecosystem-enabling fundamentals of coretech to help some of the top carriers in the industry, including a 100 year-old bastion looking to transform their antiquated technologies and modernize their processes.  

Key decision-makers contemplating a coretech solution must first take a look at their existing business architecture and ask themselves some hard questions, such as: Is it product- or customer-centered? Are we limited by closed-in architecture, lack of application programming interfaces (APIs), or an inability to participate in ecosystems? Can we only sell products that our modern legacy system will allow us to sell?  

Upstarts to the industry are the manifestation that change is needed and validation that many carriers are currently failing. A mindset change is what’s needed, and insurtechs, focused entirely on the customer experience, are quickly stepping in to fill the void. All of this disruption is causing insurance companies to quickly reevaluate their infrastructures. Carriers can be fast followers when change can quickly take their business away. 

It’s no accident that so many of the businesses we interact with on a daily basis already embody this customer-centric notion, adapting what they do and how they do it to customers' needs and preferences on a real-time basis. It’s all driven by data, and the massive expansion of our ability to collect, interpret and apply it. Bringing this potential into the heart of the business will align insurers to consumers’ true north – as the obvious choice in a crowded market.

See also: Achieving Digital Balance in an Agency

The insurers of the future will be those that enable digital ecosystems that place the customer at the center, and view the customer as the channel so that insurers can offer the products and services that the customer wants, not what a legacy system allows them to sell. Incumbent players have a powerful opportunity to drive the industry forward and bring customers with them.

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