CTO's and technology becomes key in the Insurance industry

Emerging trends will drive the focus of transformation from process led platforms to a mix and match technology ecosystem and in effect will redefine the CTO's role.

Insurance industry today - Legacy, platforms and rigidity

Analysts say that 75% of carriers businesses are hindered in their ageing legacy applications. This is historic in an industry that was among the first to deploy large transformational and automation solutions for complex rules management and large data. CTOs in the insurance industry have not had the luxury of all-in-one solutions and therefore have had to create a variety of "mix and match" solutions for Life, Annuities, P&C, Commercial and the multitude of subdivisions therein. This has created a complex multi-platform ecosystem of technology solutions that have kept this incredibly complex industry afloat, which has also been very limiting in terms of flexibility and cost.

The business response to the legacy problem has been to move to ERP type process platforms, which claim to provide next generation pre-built processes. Carriers are embarking on platform consolidation programs spending $100M to $200M per year, hoping to result in a transformation within 3 to 5 years.

Due to the focus on business processes, COOs and business leaders are now dictating the technology direction and CIOs/CTOs increasingly playing an enablement or even purely transactional role in these programs. So in effect, the COOs and product determined strategy has, in many cases, diminished the role of CTOs in strategic competitiveness.

Will this approach guarantee differentiation today?

Today's process-led platform and consolidation strategy will provide requisite efficiencies. However they may be limited in providing the flexibility, breadth and cost effectiveness needed to address the radically changing customer and business environment.

We are seeing front-end innovation with companies like Aegon's Kroodle (Facebook based social insurance), Friend assurance (social media harnessing), Progressive (Internet of Things), Ingenie (Online experience based motor insurance), and the newly launched Guevara Insurance (peer to peer). These companies are completely changing the very nature of delivery, products and lifecycles leveraging the very non-traditional technology systems and approaches. We are also seeing a significant growth in cloud and SaaS based solutions in producer management and a few core processes, even with large insurers.

Innovators are assembling 3 dimensional strategies:

Simple products: Innovators are significantly simplifying the product, channel and proposition to be relevant and quicker than ever before
Simple communication: Insurers are molding the multi-channel delivery to suit the value proposition and maximize impact
Simple integration: To become mainstream, insurers need to leverage their existing internal data and dynamic external data

The re-emergence of technology, system integration and CTO led transformation

Addressing these dimension require very different architectures, data approaches and solutions. Insurers need to be able to experiment and launch product lines quickly and efficiently while managing the delivery process seamlessly.

With customer communication transmuting, communication strategists need to manage customers holistically across various devices, media and channels. This is very different from just repurposing content.

Insurance is about data. Internal data, while being consolidated into smart new data models and architecture, is just not enough for products of the future. Seamless integration with the external global data world is critical and is also a large challenge.

Added to these dimensions, the service provider landscape is also changing. As the solutions diversify, specialized service providers emerge. Cloud, Customer Experience, Architecture Consulting and Industry Consulting are increasingly being serviced by innovative and nimble providers, who may not have the appetite for holistic transformation programs.

Technology innovation and product options are also exploding. We see customer experience systems, such as Kana Enterprise, transforming power at the hands of insurance service center agent who are still a key part of the business. ZineOne and Moxie power mobile "in-app" engagements are where a significant percentage of 'moment of truth' interactions and business are being lost. The human element is being significantly enhanced by chat and virtual agent approaches from Nuance. Splunk and other Big Data enablers at the data infrastructure layer are becoming a "must consider" if we really want to be ready for the future.

Thus Insurers are beginning to realize that they have to more actively design, engage with and manage the solution ecosystem if they want to deliver in this evolving environment. This transformation will need a very high level of internal stewardship, design and management sponsorship as Insurers move to driving differentiation through technology rather than depend on just another platform deployment.

All brought together by the CTO

This "mix and match" approach has to be anchored by a strong techno-functional role played by the CTO's office. The new age CTO will have to build differentiation through technology, translating consumer trends to technology signals and skillfully manage a provider ecosystem to drive business differentiation. As the industry gets further disrupted, with large institutional shifts gaining momentum, insurance boardrooms may look to the CTO to play a more active role in orchestrating a successful "mix and match" strategy. Increasingly, we will see the CTO become a key part of the business strategy with COOs looking to them to define the art of the possible.

About the Author

Saju Joseph is a seasoned IT and BPO professional with around 17 years cross industry and cross country experience strategizing, executing and analyzing change in the industry. Over the last 3 years, he has been in charge of transforming Wipro's Insurance System Integration and transformation business through a revamped partner ecosystem

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CTO's and technology becomes

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