Core Systems and Insurtech (Part 1)

Though our organizations are independent, we are all a part of an interdependent ecosystem for service delivery — a highly relevant concept.

On July 1, Canadians celebrated Canada Day, commemorating the fusion of Nova Scotia, New Brunswick and the province of Canada. On July 4, the U.S. celebrated its Independence Day, which was the act of 13 interdependent colonies. It is fascinating to think that as we celebrate independence, we are also celebrating interdependence, which is very much like what is happening in insurance. Though you may be part of an “independent” insurance organization, we are all a part of an interdependent ecosystem for service delivery — a concept that is highly relevant as we discuss becoming a digital insurer. For my next three articles, I would like to shed light on what it means to be a digital insurer. I would also like to provide insurers a platform for thought, because, if we can properly conceptualize becoming a digital insurer, we will find it much easier to prioritize our efforts and know which ones are clearly supporting our end goal. See also: Finding Success in Core Systems What Is a Digital Insurer? First, we should agree on our concept of digital insurance. What is a digital insurer? Why is it important?               Looking at digital insurance is certainly enhanced by thinking through our past. Traditional business models have been centered on products, siloed processes and backward-looking actuarial risk pricing. Digital efforts break down these walls and encourage reconstruction of a new business platform. This reinvention of the insurance business can (and should) result in customer-centric efforts, a reduction of silos and an increase in forward-looking risk prevention. When people ask me to describe what a digital insurance platform does differently, I share these points:
  • It maximizes effectiveness across the entire customer journey with deeper, personalized engagement.
  • It enables process digitization for improving both operational efficiencies and customer experience.
  • It provides digital data-driven insights for better decision making and for actively identifying customer needs.
  • It adapts to rapid changes.
  • It fosters rapid roll out of new products, capabilities and entrance into new states or geographies.
Why are these important? Because the next wave of growth for insurers is expected to come from their ability to provide a superior customer experience — not just in comparison to other insurers but compared to all companies (think Amazon, Apple, etc.) with which their customers interact. And because digital platform development is a “limited” opportunity, meaning that there is an expiration date on its ability to provide competitive advantage, the opportunity is up for grabs for incumbent insurers as well as for new and unorthodox entrants that are technology companies looking to offer better insurance experiences to the masses. Customer Centricity — The Backdrop of Digital Insurance McKinsey states that insurers looking to reap the benefits of the digital era should aspire to become “Digital Firms,” meaning they need to pursue an enterprise-wide approach to digital and understand digital is much more than just tackling some digital initiatives like a portal. But insurers don’t need to become digital for digital’s sake, they need to become digital to be customer-centric. Customer centricity is the backdrop against which all digital efforts must be placed and compared. Although strategy and organizational processes that support digital are quite important, much work is needed to establish a new landscape of tools for ensuring customer centricity through every step of the customer’s journey. This would include enabling process digitization for improving both efficiencies and effectiveness for the customers and improving the ability to offer digital engagement solutions in tandem with transactional systems. It would also include rapidly leveraging new data sources, analytics and automation technologies for innovating new products, new pricing structures, better underwriting, new services and new customer experiences. To prepare for this paradigm shift and win in the market, digital insurance platforms need to be reimagined. Transactional core systems opportunistically stitched with digital initiatives to cobble the solution together will not achieve digital transformation. Core transactional systems, emerging technologies and insurtech innovative capabilities must be brought together through the fusion of capabilities that create a new business architecture and platform. Digital insurance platforms will leverage the best of both worlds. The Yin-Yang of Insurance Systems But can core platforms and insurtech capabilities work well together? At first impression, core systems, emerging technologies and insurtech appear to be a forced arrangement — a bit of an odd trio.
  • Core systems founded in insurance have been proven to run traditional business models. They are mission-critical transactional systems that will ensure continuing operations and compliance.
  • Emerging technologies such as cognitive, internet of things, blockchain and more are the new tools leveraged by innovative companies, especially insurtech.
  • Insurtech is challenging the very business model supported by core systems with its roots in technology and its ability to provide capabilities on the periphery of overall insurance business needs.
Here is where I like to draw upon a bit of ancient Chinese wisdom: The yin-yang of how seemingly opposite forces could actually be complementary, interconnected and interdependent may fit well with core systems and their relationship to emerging technologies and insurtech capabilities. If core systems and insurtech are interconnected, then we can harness the power of the AND, and we can squash tyranny of the OR. We can be operationally efficient AND effective to customers. We can transform products, pricing and processes AND become personalized and rapidly profitable. We can both support traditional business models AND experiment with new models. See also: Change Accelerates in Core Systems   To draw on another analogy, a digital insurance platform is somewhat like a fusion reactor that effectively and safely conducts the molecular fusion of core transactional capabilities and innovative emerging technologies and insurtech capabilities to provide exponential energy to the enterprise. In my next article, we’ll look closely at the reactor. What does this fusion mean to insurance operations? What important elements are combined in the fusion process? How can this yin-yang relationship exist as a platform for opportunity instead of as a recipe for strife? Managing the process of becoming a digital insurer may test our ability to change, but it will also certainly improve our organizational fitness for the future. This article was written by Manish Shah. It originally appeared on

Denise Garth

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Denise Garth

Denise Garth is senior vice president, strategic marketing, responsible for leading marketing, industry relations and innovation in support of Majesco's client-centric strategy.


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