The convergence of insurance and digital technology — “insurtech” — has transformed the industry. Although insurance companies initially feared insurtechs would whittle away at their market share, partnering with these disruptive tech firms is now widely seen as the catalyst necessary to spur growth and accelerate the development of new insurance products. But challenges remain.
Over the past few years, insurance companies have invested heavily in insurtech. In 2021, the insurtech market was valued at $3.78 billion, according to Grand View Research. For insurers, the advantage of partnering with insurtechs is that they can supplement their existing product portfolio or simplify internal operations in a fast, low-cost way without having to build the internal expertise or applications themselves.
How are use cases for insurtech evolving?
The rise of insurtechs has had an uplifting effect on the industry, and the list of possible transformations is growing. Early use cases include:
- Telematics for usage-based and “pay-how-you-drive” auto insurance models
- Disruptive business models, such as peer-to-peer insurance
- AI-aided fraud detection and AI-enabled service
- Internal workflow automation with robotic process automation (RPA)
- Machine learning to automate claims processing
However, while insurtech has delivered transformation on a small scale via standalone projects or point solutions, continuing to innovate in this one-off, loosely connected manner will eventually become too difficult to manage and collapse under their own weight. To capitalize on its full potential, insurers must connect insurtech to their core business. This requires a new breed of API-first, customer-centric core systems, called coretech.
Coretech seeks to solve the largest barrier to innovating with insurtech: integration. Today’s IT teams are spending over a third of their time on integration projects, according to Mulesoft. Almost 9 in 10 businesses point to integration challenges as a blocker to delivering on digital transformation.
Why is integration with insurtech so difficult?
After all, we’re living in an era that’s been dubbed the API economy. Nearly every core policy administration system out there has APIs. Many have app marketplaces where customers can find apps from pre-integrated partners. There are even integration-platform-as-a-service (iPaaS) tools that exist to make connecting multiple systems easier. The most famous, Zapier, claims to integrate more than 3,000 different applications with one another.
Choose any pair of cloud applications, and you can likely find some off-the-shelf way to handle it. So why is integration a roadblock to insurtech adoption at all?
Not all integrations are created equally
“Does this product integrate with that one?” It’s a dramatically oversimplified yes/no question. It’s like asking a pastry chef if they mix ingredients together. Obviously they do, but how sweet is the danish? How flaky is the croissant?
When it comes to insurtech, it’s rarely ever about whether applications can integrate. Assuming you’re talking about cloud solutions, the answer is almost always “yes.” The heart of the matter is exactly how deep and transformative the integration can be.
Follow-up questions are critical:
- What data can be transferred?
- Is it bi-directional?
- Does it happen in real time?
- If data changes in one system, does the other get notified?
- Is the workflow automated and event driven?
- What’s the user experience like?
- Can one app’s functionality be embedded into the other?
- How easy are the integrations to manage?
- When one system gets updated, will the integration break?
Clearly “Does this application integrate with that?” is a question that merits more than a yes/no answer.
All policy admin system (PAS) vendors will tell you they have APIs to support any integration. They’re probably telling the truth. Many will point you to their library of pre-built integrations. Those connectors are real. However, context is king. Simple integrations are better than nothing but the advantages of insurtech cannot be fully realized without a deeper level of connectivity.
The most basic integrations slingshot data from an insurtech app to the core system in one direction, with no concern for what happens down the line. From a workflow perspective, the integration might automatically trigger a simple action in response to a predetermined event.
Richer integrations sync data between systems and notify related applications when data changes, enforcing data hygiene and automatically resolving conflicts. They support conditional logic that triggers actions based on the details and context of an event that occurred. The integrations could incorporate custom algorithms or AI to determine, for example, if a policy application requires human reviews and underwriting.
While it’s no secret that decades-old legacy solutions struggle to support advanced integrations, even core systems deployed more recently — referred to as “modern legacy systems” — are being replaced as they’re simply not designed to integrate quickly, deeply and with no fuss.
Demand more from your core system’s integration layer
For insurance companies evaluating core IT solutions to replace their legacy or modern legacy systems, it’s essential to understand the depth of integrations. A coretech platform is essential. Only cortech is capable of quickly connecting, disconnecting, and reconnecting with other systems, platforms, and insurtechs to peer deeply into multiple data streams, automate workflows, and simplify customer experiences.
Coretech shares its DNA with insurtech. It’s built with the same languages, microservices architecture, APIs, containers, and event-based workflows so a coretech system can natively support advanced insurtech integrations.
For IT, the payoff is significantly less effort required to connect applications, get them to work better together, and manage the integrations. For the business, it means simplified operations, reduced labor costs, and winning customer experiences. When that’s multiplied across thousands or millions of users and policyholders, and hundreds of applications, the value of coretech-to-insurtech connectivity grows exponentially.
To learn more about how coretech enables insurers to realize the full promise of insurtech, download our coretech e-book.
The post How to save the $3.78B insurtech market: Coretech to the rescue appeared first on EIS.