We speak to Mendix’s Global Industry Principal for Software and Insurance, Paul Fondie, about how legacy insurers can move forward by leveraging API and low-code tools to extract data and improve their services, overcoming the barriers posed by existing architectures.
How has legacy software held insurers back?
Unfriendly existing infrastructure is the main reason for slow insurtech adoption. However, this presents a different set of challenges to general insurers and legacy insurers that have acquired data from other businesses.
General insurers have legacy systems that often have been licensed, bought, or built in a way incompatible with integrating new applications.
As a direct result, adopting most big data technology may require a complete overhaul of a decade-old infrastructure.
When it comes to legacy insurers as a business, they usually store customer information, which they’ve acquired from different sources, on various disjointed data systems.
In other words, to integrate big data, these legacy insurers need a system capable of bridging the fragmented systems.
However, digital transformation, including big data adoption, requires robust funding, which is a strain for too many of these businesses.
There’s no guarantee that data would provide immediate value, so many businesses in recent years have not prioritised digital transformation – although that’s the only thing that will allow them to stay afloat and flourish in the long term.
How is big data being leveraged today, and how can legacy insurers tap into data pools?
In the past four or five years, there’s been significant progress in low-code technology and the availability of APIs.
This progress, combined with big data technologies, provides insurers with better tools to harness data from legacy systems as it becomes more digestible for analytical tools.
Forward-looking companies five years ago started centralising data across their organisations and connecting applications with external data sources to create one source of truth today.
These advancements have simplified insurance businesses’ gathering and sifting through data, creating a ripple effect on their operations.
Insurers can leverage big data to improve the quality of their pricing, which in turn can break down barriers between claims and underwriting divisions.
Access to comprehensive, detailed data allows better personalisation of pricing and more accurate prediction of losses based on the causes, origins, and trends of previous claims.
As data becomes less fragmented, this will also translate to savings in time and efficiency. They can also use data-driven insights to offer personalised pricing, creating a more transparent market.
Please also take a look at our upcoming virtual event, InsurTech LIVE, coming on 18th October 2023.
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