Earlier this month, I moderated the Property/Casualty Panel at Novarica’s 11th annual Insurance Technology Research Council Meeting. Panelists Chuck Ruzicka, Jim Klotz, Jeff Goldberg, and I shared our insights and engaged in discussion with Council members around the challenges and opportunities shaping the property/casualty industry in 2018. Three of the major themes of the discussion were emerging technology, core systems strategy, and working with vendors.
Hype and Hope in Emerging Tech
Jeff noted that “we tend to talk about technology in silos” and as a result, emerging technologies get simultaneously overhyped and underhyped. No single technology is going to upend the entire industry, yet together they can accelerate each other’s growth and effect rapid change. As examples, IoT and the internet yield sets of big data, and big data underpins machine learning. Insurers shouldn’t look to individual technologies as silver bullets; rather, they should look out for how emerging technologies will influence each other, and potentially affect traditional insurance processes and value propositions.
Microservices and Core Systems Strategy
As core suites continue to get bigger, the industry is experiencing a pendulum swing and insurers are demanding more flexibility. Vendors are increasingly making microservices available to insurers, though adoption is only beginning to take off. Some insurers are moving towards headless implementations of insurance systems, i.e. using the underlying microservices layer of available core systems to customize user interfaces. The proliferation of microservices would mean increased complexity but would also mean improved flexibility and agility for most systems environments.
Best Practices and Challenges with Vendors
One attendee expressed concern with the possibility of modern systems becoming legacy environments within a few years. Our team agreed that keeping current with vendor upgrades is crucial to preventing this problem. Chuck likened internal upgrades to muscle memory: if insurers continue to take upgrades, they get easier. If they wait, they get harder. Even so, solution upgrades can be painful and disruptive. Jim pointed out that microservices will likely provide some relief as vendors will be able to isolate components that need change, but this won’t happen overnight. To soften the blow of disruptive upgrades, insurers should take care to monitor risks, establish strong relationships with solution partners, and understand vendor release cycles.
We also discussed a range of additional topics, including governance, performance metrics, digital strategy, and the impact of analytics. To learn more about our research and advisory work in these and other areas, please contact us at [email protected] and we’d be glad to set up a time to talk.
Add new comment