A flexible and modular IT solution is needed for today’s insurers
In a world where change is the only constant, insurance companies must adapt swiftly to meet the evolving needs of their customers as well as regulators. The landscape of insurance is shifting from one-size-fits-all solutions to personalized offerings tailored to individual needs.
Furthermore, another significant dynamic in the industry is the migration of old legacy systems to a new combined system. Therefore, a system must possess flexibility in the capability to adapt to the history of all older insurance policies, as well as the ability to grow and keep pace with the new demands of the business. Insurance companies can embrace this transformation and bloom in the digital age through five focus areas:
Adapting to individual needs
Today’s customers demand flexibility, convenience, transparency, and less bureaucracy in their insurance interactions. Insurance companies must offer affordable and flexible products that cater to the unique needs of each individual – all while managing the costs and effort required to stand out and deliver truly unique offerings in the market. Whether it’s life insurance, retirement planning, or protection against loss of income, customers seek products that not only provide financial security but also help them create wealth. Moreover, there’s an opportunity for life insurers to expand business into vertical markets, such as e.g. health insurance solutions, providing comprehensive coverage beyond solely fund accumulation.
Personalization – the new normal
Personalization is no longer a luxury, it’s a necessity. As digital behavior varies across different markets – in Sweden 68% research the product online and above 30% buy online, while in Spain, 52% use the internet to research the product online, but the online penetration is just below 1%[1] – insurance companies must tailor their services to individual preferences rather than relying on generalized group characteristics. Millennials, the primary digital insurance consumers, expect personalized experiences that resonate with their emotions and aspirations. Insurance companies can with a clear value proposition differentiate their offering and make themselves unique compared to other insurers, by e.g. offering attractive pricing, exceptional customer service or innovative approaches adapted to the needs of insurance buyers in a regulated market. This is not just an excellent mean to retain customers but also to attract new ones.
Unlock product innovation
The combination of digital transformation and customer-centricity is key to drive product innovation in the insurance industry. New technology with AI driven solutions offer a wealth of data to enrich customer understanding, drive product innovation, and refine pricing strategies. Moreover, they enable more precise underwriting, streamline claim processing, improved fraud detection, and mitigate risks effectively. According to a study from EY, customers are increasingly interested in usage-based insurance policies, as much as 69%, and simplified products that offer clear benefits[2]. Insurers must leverage digital channels to design and launch products efficiently, providing seamless and personalized experiences that keep customers engaged. Add-on features allow consumers to customize their protections according to their specific needs, further enhancing the value proposition.
Boost agility through cloud
Agility is crucial for insurers to keep pace with customer expectations and technological advancements. Embracing Insurtech solutions and migrating to the cloud can provide insurers with the flexibility and innovation capabilities needed to thrive in today’s fast-paced environment. EY research underscores this shift, revealing that nearly half (49%) of the European insurers aspire to migrate the majority (≥80%) of their operations to the cloud, aiming to boost efficiency and adaptability[3]. Furthermore, as insurers digitize and automate operations, they gain opportunities to collaborate with external partners through ecosystems and joint ventures. Digital transformation not only streamlines processes but also unlocks new possibilities for innovation and partnership.
Cost optimization through technology
Each year, insurers face mounting regulatory pressures. The EU’s latest framework, DORA, emphasizes cybersecurity and operational resilience, impacting insurers and their technology partners alike. The evolving compliance landscape requires more than just patching legacy systems, it demands proactive measures to meet stringent requirements.
Cost optimization is not just about reducing labor costs, it’s also about leveraging technology to streamline processes and maximize efficiency. Automating administrative tasks and modernizing legacy systems are critical steps in driving cost efficiencies. Recent research from PwC reveals that insurers typically allocate 70% of their IT budget to maintaining legacy systems, with expenses increasing as these systems age[4]. Cloud migration presents a cost-effective solution for insurers, speeds time to market, offering scalability, reduced maintenance costs, and opportunities for innovation. Moreover, optimizing costs includes recognizing the value contributed by people and teams, empowering them with technology to focus on higher-value tasks. The Society of Actuaries report found that market leaders launch new products 33% faster than the average – all thanks to modern technology.[5]
Empowering insurance with Evitec Solutions Life
At Evitec Solutions, we understand the evolving landscape of insurance, and we’re committed to lead the way towards a future focused on customer-centricity. Introducing Evitec Solutions Life – an innovative insurance platform designed to adapt seamlessly to the diverse needs of today’s customers.
Our platform is built on the principles of flexibility and modularity, offering insurers an extensible solution for a competitive edge. With Evitec Solutions Life, insurance companies can experience smoother management, enhanced customer experiences, and efficiency in product portfolio handling.
In conclusion, the future of insurance lies in embracing digital transformation, personalization, and agility. By understanding and adapting to the shifting needs of customers, insurance companies can innovate, thrive, and deliver value in an increasingly competitive market landscape. It’s time to navigate tomorrow with confidence and resilience, shape the future of insurance for everyone’s benefit.
Refrences:
[1] Swiss Re Institute, 2020
[2] EY Global Insurance Consumer and Small Business Owner Surveys, 2020
[3] EY European Insurance Cloud Adoption Index, 2021
[4] PwC, A Perspective on Modernising Insurance Legacy Systems, 2020
[5] Society of Actuaries, Understanding the Product Development Process of Individual Life Insurance and Annuity Companies, 2017
