Over the recent years, the digital revolution has heavily influenced the insurance buying process through mobile apps, social media, direct online sales and aggregators. According to Gartner, digital leaders expect to generate 62% of their gross written premium (GWP) from digital products and services by 2018, while digital laggards expect only 31% of premium from digital channels.
A timemetric report in 2014 suggested that 60% of new motor insurance policies are purchased via online aggregators in the UK; indicative of the rise of aggregators in the rest of the world. This digital shift is the key driver for most of the changes in traditional insurance spend and strategy today. Insurers are scrambling to react and if possible, dominate in this environment. Some carriers are reacting by quietly ceding their customers to online aggregators and are focusing on strengthening their core IT value chain to ensure a stronger core process system, so as to be able to better service their agents and channels. Others will grab this shift by the horns and vastly increase the breadth and depth of their offerings to dominate this space. This end-state involves a significant change in capability for traditional insurance firms.
The technology blueprint of this future will orchestrate multiple technologies across channels and devices impacting processes like claims, distribution, underwriting, and renewals, for instance - the use of artificial intelligence in automation, underwriting, deploying drones for catastrophe management and risk assessment.
In today's era of internet of things (IoT), an insurer would probably know if your house catches fire well before you do. Technology is moving insurance from remedial risk coverage to preventive risk coverage. This playground obviously puts immense pressure on the speed of product development too.
Unfortunately this technology "ask" is not satisfactorily addressed by today's large core platform centric approach. CTO's will have to leverage multiple technologies, products and vendors to provide their business users with true transformation and flexibility - at a far higher scale than before. Sequential deployment starting with a multi-year core platform transformation program could get very limiting.
With this next-gen transformation journey being complex and challenging, organizations should touch upon a few interesting key success factors such as one - management of a highly multi-product distributed IT solution set, two - a holistic business program management approach and three - an ability to manage distributed and specialized talent.