The insurance market was evolving quickly even before the COVID-19 outbreak. It’s worthwhile to take a quick look at those pre-pandemic trends, as they will likely be accelerated during the eventual recovery. One thing is clear: policy administration systems (PAS) will be key.
PAS are insurers’ beating hearts. They manage the end-to-end policy lifecycle of an insurance contract from initial quote, through underwriting, policy issuance and post-sales support. Traditional policy administration systems were built in a monolithic manner with no consideration for collaboration or customer experience, and little to no capabilities to integrate outside the back-office world. It’s time for insurers to hit the accelerator on obtaining modern capabilities.
There has been a clear shift in PAS requirements over the past few years. With increased customer demands and the necessity of digital transformation, insurers understand that they need a PAS that is flexible and agile, increases efficiency and speed to market, and can connect to any system simply and easily.
Adoption of New Technologies in the Insurance Market
There are many new technologies that are prevalent in the market today that will increase return on investment (ROI) for carriers. Adopting technologies such as Robotic Process Automation (RPA) will lead to process optimization and cost reduction. Artificial Intelligence (AI) will increase automated decision-making and the binding process. Advanced analytics and data are single-handedly changing the power of understanding a carrier’s book of business, identifying exposure and informing actions needed to increase revenue.
There are many more emerging technologies carriers can take advantage of, such as machine learning, the Internet of Things (IoT) and others, as well as insurtech services. These emerging technologies are compelling insurers to move towards a new level of openness and innovation in their systems. The drive towards increasing product capabilities, leveraging new distribution channels, entering new markets while improving efficiency and reducing costs, is being fueled by these innovations. PAS must stay apace with this trend and open their architectures to facilitate the smooth incorporation of new technologies and services.
Demand for Flexible and Quick-to-Implement Systems
Getting your product into the hands of customers faster and responding to their increasing demands for change have become key to success and maintaining a competitive advantage. To get ahead of the market and maintain products’ flexibility, insurers are seeking fast launch methodologies, as well as configurable systems that can be operated by business users.
Focus on Core Business
An increasing number of insurers are looking inward at their core business and then outsourcing IT services and transitioning to the cloud. The need to focus on the actual business of insurance can be achieved by putting the IT side of the operation in the hands of IT experts and transitioning to cloud-based services. Insurers prefer to implement their core PAS in the cloud through a software-as-a-service (SaaS)/cloud model. Cloud is prevalent today and as this trend continues to grow, PAS systems are moving to the forefront. Insurers have already benefited from cloud computing through cost savings. Additional drivers for cloud adoption are speed, flexibility and scalability to foster increased competitiveness.
My next blog post in this trend will look at two additional trends…