Workday: insurtechs leading digital transformation
Insurtech Digital gets the thoughts of Workday’s Financial Services Industry Strategist, Viren Patel, about how insurtechs are helping transform the insurance industry into a more digital proposition. He also discusses the regulatory landscape and ways in which legacy insurers can improve their operations, in the short and long term.
In what ways are insurtechs helping transform the face of insurance to a more digital proposition?
For the most part, insurers have successfully pivoted their business operations in response to COVID-19. Investments made in digital services are paying off as digital insurance adoption by customers continues to rise. However, insurance profitability is at risk. Economic conditions caused by the pandemic continue to hamper the outlook on the return to pre-pandemic levels.
Most digital transformation we've seen in insurance has been at the front end, with the insurers making it quicker and easier for customers to engage with them online or through apps. The most progressive providers are now transforming their mid-office and back-office systems to make greater use of automation in underwriting and handling claims.
The insurtechs are starting with a clean slate. Their IT systems, data management and integrations are already optimised for automation, real-time data processing and faster, fairer customer experiences. More traditional insurers that are responding to this threat are either partnering with insurtechs and taking advantage of their systems, or seeking to replicate them over their legacy environments.
How are insurtechs able to foster digital transformation without disrupting the flow of daily business at legacy insurers?
Insurtech is disrupting the market, and disruption is inevitable. We aren't going to see wholesale change. Whether they build or buy, legacy insurers are approaching digital transformation relatively conservatively. They are testing new features and new ways of working in a controlled way, and will gradually broaden out what works across their operations.
The big market disruption in insurance will come from non-traditional insurers partnering with insurtechs. The big tech companies have a lot of data that could give them an edge in insurance if they choose to work with companies that do claims and underwriting well.
How much has P&C insurance, and surrounding regulations, insulated insurers from innovations? How is P&C insurance becoming more digitised today?
Innovation in P&C insurance is driven by market demand and a new generation of buyers. The first wave has been at the front end, with these insurers engaging with customers digitally and directly.
The next two waves to watch are the mid-office and back-office systems that allow more personalised products and pricing, which is ultimately a big data and AI play, and the embedded finance opportunity, with insurers making policies available faster and more conveniently to customers precisely when they need them through third parties.
Imagine how convenient it is to be offered an accurate, fairly-priced insurance policy by an estate agent or car dealer when completing a home or automotive purchase.
In what ways can insurers modernise their legacy platform? Must they integrate an insurtech's platform to succeed in modernisation?
Modernising legacy insurance platforms doesn't necessarily require an insurtech platform, but it is undoubtedly a big multiplatform play. Whether you buy off-the-shelf platforms or build something bespoke, the key to success will be cloud and integration. These systems require open APIs to support the free flow of data between the front and back offices, appropriate levels of cyber and data security, and the agility and adaptability to add new data elements and analytical tools to extract maximum value from that data.
What considerations must insurers make when considering a technological update to their legacy systems?
Security is huge. Having the appropriate levels of cyber and data security for whatever platforms and technologies you adopt to update legacy systems is vitally important. Equally as important, however, is having the flexibility and agility in those systems to move fast, combine multiple datasets and use tools like AI to improve how you make decisions across the board.
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