The Future of Core Systems Is an Insurance Marketplace

With core systems vendors moving into the cloud and offering SaaS platforms—and insurers embracing that shift—the industry has already started to see vendors pre-integrating with or buying data sources. Insurity, for example, purchased SpatialKey, and Guidewire purchased Cyence. Vendors are aware that data is a key component of the core system; being able to integrate with and pull in third-party data out of the box is part of this.

Third-party data augmentation is not just something that helps the underwriting process, it is fundamental to the underwriting process, and the acquisitions and integrations of UW systems are reflecting that reality. The out-of-the-box agent portals and UW workbenches of the future will have third-party data pre-fill and automated scoring built in, serving as more of an underwriting environment than a workbench.

The next step is policy administration systems following a similar evolutionary path. InsureTech startups like Slice and Afficiency are already leading the way—instead of offering traditional core systems, they offer a platform where users can build, underwrite, and sell their products. These platforms are pre-integrated with sales channels like comparative raters and broker networks. When insurers use those systems to put out their products, they’re automatically part of a marketplace.

Snapsheet is an example of this type of offering on the claims side. It provides a claims platform, but it’s also integrated with repair shops and a network of people to support the claim. This is taking a network approach to claims rather than a system approach, a recognition that every insurance process is about interactions between many parties inside and outside the insurer organization. InsureTechs are breaking out of the core systems map box and focusing on what will provide the most value.

With a growing number of core systems moving to the cloud, it’s likely that this type of marketplace or exchange will become the norm. Third-party vendor relationships are going to evolve into a vendor network, providing built-in value that insurers will be able to participate in by clicking a checkbox. SaaS means the specific technology stack becomes less important and the pre-built marketplace becomes the differentiator.

Large insurers typically have this kind of network built into their service, but if vendors make this a de facto approach for their core systems, insurers of all sizes will have more resources at their disposal.

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