Last week, during Novarica’s annual Research Council Meeting, I had the opportunity to moderate a panel discussion of three of my Novarica colleagues on business and technology trends in P/C insurance. Novarica EVP Jeff Goldberg and VPs Chuck Ruzicka and Deb Zawisza shared their insights and experience on emerging technologies and innovation, as well as the operational and delivery requirements that CIOs face day to day.
Competing While Keeping the Lights On
The panelists discussed Novarica’s recent report on Speed to Market for P/C Insurers, which found that IT alignment and early involvement can have a major impact on the timeliness of product delivery. While we do see improvements in our clients who have completed core systems transformations, Chuck pointed out that taking advantage of new technologies can require product rationalization—thinking not of individual state products, for example, but as a large national product with configured state exceptions. Alignment is also critical internally for budgetary reasons, as Deb noted; seeing IT as a value enabler, rather than an expense, can generate credibility within the organization. Communication is key.
New Technology Approaches and Applications
A major topic of discussion was how microservices architecture and native cloud hosting platforms may change technology delivery and strategy for insurers. Regarding microservices architecture, Jeff cited two potential points of value to insurers: more immediately, that microservices will enable easier vendor delivery and change localization, and more speculatively, that insurers may one day license discrete functions, with a digital layer tying things together. Similarly, SaaS-styled core systems hosted and managed on cloud servers may reduce pain from upgrades.
Jeff also noted in discussing digital strategies that insurers have ceded ground to InsureTechs by underinvesting in digital experience. Chuck pointed out that “digital strategy” isn’t monolithic—insurers should think through user personas to make sure all users have tailored experiences—whether they’re agents, prospects, policyholders, claimants, or internal users.
Innovation and InsureTechs
Although InsureTech investment is at an all-time high, Jeff cautioned that most InsureTechs won’t change the industry overnight. Many will fail, and others will be acquired by incumbent insurers—a win for those who can acquire new technology and expertise through these purchases. Other InsureTechs will garner headlines and valuation, but Jeff said it was hard to imagine any InsureTech getting so big it couldn’t be acquired. And if some InsureTechs become new incumbents, the industry can adapt, as it has in the past. Chuck noted that some InsureTechs, especially Analytics Arms Dealers, can be key partners for insurers who can’t develop capabilities in-house.
Meanwhile, Deb argued that the recent announcement of AM Best’s new innovation rating was a positive step for insurer IT departments, who now have an additional metric to make the case that the status quo won’t allow carriers to remain effective. Although CIOs in the audience argued that innovation was easier for larger carriers with large investment budgets, Novarica suggested that the alignment of purpose and mission in smaller carriers could help them identify key areas for vendor partnerships.
If you didn’t have the opportunity to attend the Research Council Meeting, we’ll be issuing a report that captures discussions and insights in mid-May—or feel free to reach out to me to find out more about becoming a Council member.
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