Headquartered in New York, Majesco is a global leader in providing software & IT services to the insurance industry majorly across property & casualty (general insurance), life, annuity, health, pensions, and group & worksite benefits insurance areas.
The enterprise software landscape is changing rapidly. Many industries including Travel, Retail and Media have seen the transition from large, monolithic enterprise software solutions to cloud deployed and now platform solutions. And insurance is on the cusp of this transition.
The insurance industry is hundreds of years old and has long been insulated against disruption thanks to regulation, product complexity, in-force books, intermediated distribution networks, and large capital requirements. However, this is changing rapidly. I have seen more changes in last three years in the industry than what is experienced over last 30 years.
The U.S. insurance industry is changing rapidly and has an opportunity to leapfrog from enterprise software to industry platform solutions. Rapidly shifting industry dynamics, InsurTech growth, maturity of cloud computing and maturing vendor core solutions are enabling this change. A robust industry platform will enable insurance carriers to innovate new products, invent new business models, and leverage large volume of new data sources with artificial intelligence (AI) capabilities to assess risks. Insurance carriers will be able to consume these capabilities as services, setting the stage to dramatically transform the industry and offer significantly enhanced products and experience to their customers.
What is Driving the Changes in Insurance Industry?
Change is being forced on insurers, whether they like it or not. Several of the orthodoxies traditionally underpinning the industry are being challenged and disrupted including:
- A new generation of customers and distribution (including agents) that demand a similar experience like Amazon and Apple which they are used in their daily lives.
- The advent of new digitally born insurance players like Lemonade who offer traditional renters or homeowners insurance and Trov who offer innovative on-demand Insurance, but both with amazing digital customer experiences.
- A changing portfolio of insurance products, with a decline in some traditional products like auto insurance, and new categories like cyber-related
risks, autonomous vehicles, climate change and more are offering unique growth opportunities.
- Rapidly emerging new sources of data and AI capabilities that provide different ways to assess and underwrite risk are creating opportunities to improve market share and profitability.
- The advent of InsurTech and the rapidly growing firms, over 1700 backed by over $35 billion of venture funding, that are offering innovative solutions to disrupt almost every aspect of Insurance value chain.
Digital Platforms Drive Growth & Performance
McKinesy estimates that P&C insurers in the top quartile of digital performance are achieving twice the growth rate of their less digitally advanced
peers and are delivering better profitability at the same time. Technology is at the heart of this transformation. Today, a majority of insurance carriers are challenged to keep up and defend their position in an era of relatively flat IT budgets.
In this context, the strategies and IT priorities is shifting from modernization of legacy system to growth fueled by innovation. Insurance carriers
are looking at opportunities to defend or expand their market share by offering new innovative products, expanding to new regions, adopting new distribution channels including direct to consumer and providing a compelling ‘amazon like’ user experience. Nearly 76 percent of Insurers believe their competitive advantage will be determined not by their organization alone, but by the strengths of their partners and ecosystem they build. This is fundamentally where a platform approach differs from offering an application in the cloud.
Platform solutions provide the following key capabilities that address the industry challenges and help capture the opportunities:
- Speed to Value: The traditional legacy modernization approach typically takes 12-18 months to implement new line of business or introduce new
products. In today’s rapidly changing market, speed to implementation and market must be accomplished in weeks or a few months rather than years.
- Consume Capabilities as a Service: Instead of monolithic applications like policy or claims management, a platform offers lightweight options that bundle only the capabilities which are needed as service.
- Test & Learn capabilities: Increasingly, testing innovative ideas and ‘failing fast’ is paramount to future success. A platform provides test & learn capabilities at low cost and risk.
- Client Centricity: Traditionally, technology solutions were designed around the insurance product. In today’s world, it is all about the customer. This coupled with the blurring lines among products, a client centric approach is mandatory. A platform will enable carriers to design the products and services around the customer.
- Integrations: One of the biggest challenges for insurers has been the integration with other solutions or services in the insurance ecosystem. The platform approach provides an open API approach, creating a ‘find and bind’ environment to a broader industry ecosystem of innovative capabilities that provide significant value and speed to market.
Insurance platforms offering these capabilities make it easier for insurance carriers to innovate and compete in a fast changing market. And while the insurance industry currently lags other industries in providing a powerful digital experience, as insurance industry platform solutions mature, they will lay the foundation of rapid innovation and transformation of the industry. All of us as customers of insurance carriers, will see improved customer service, personalized and innovative products over the next few years driven by Industry Platform solutions. It is an exciting time to be in the insurance industry!