By Leo Corcoran, CEO
I’ve just spent almost a month away from the office, meeting with prospective clients, discussing trends at global events, and indulging in local delicacies, but I digress. Having experienced a mixture of climates; from sunny South Africa, mild Tokyo, and freezing cold London, I can honestly report that all three continents are experiencing similar issues in their day-to-day claim operations.
It’s always interesting to me to see the trends across the global insurance market; fragmented systems with silos of data, outdated legacy systems which IT are struggling to keep up to date, and manual data entry causing data duplication errors. While the main topics of conversation at both the Insurance Forum and the AUCC were around RPA, AI, data analytics, and the future of the industry; the way I see it is that if these insurers do not sort out their foundations soon, it will be like building a house on quicksand!
I spent time talking business with multiple insurance professionals and the one thing they all have in common is their issues with legacy software. The underlying infrastructure has typically been built for their specific needs many moons ago and additional functionality has been bolted on over time. However, internal IT is struggling as the speed of change over the last 3 to 5 years has been phenomenal. There is also the real challenge where the teams who built these systems are beginning to retire, and the younger IT teams are left working with a development language they are not familiar with. I met with one carrier where they admitted that they did not have an internal developer to maintain a critical legacy system, they had all retired – I hope this never happens to you!
So What are Insurers Planning on Doing?
There is a lot of talk about change; insurers want to install RPA and AI, improve efficiency, and increase productivity. These technologies sound exciting and futuristic but unfortunately, the boring issues need to be dealt with first. For example, in order to successfully analyze data, the data needs to be gathered in one data lake, not in several disconnected silos. But how does a large insurance company go about getting that data lake? Unfortunately, the best way is the painstaking process of reviewing the capabilities of their existing systems, deciding how to integrate all data in one central location, and then going to market to choose the solutions to make this possible. After that, implementing analytics or AI is easy!
Are There any Motivators for Change?
This is something I’ve asked myself time and time again; are we wasting our time preaching about the benefits of digital transformation, when we’ve seen insurers continue to build out their legacy systems functionality, rather than investing in a vendor solution? If they had considered overhauling their system when we spoke with them last year, they’d be halfway there – and that to me is frustrating.
This round the world trip was not a once off – I do it a couple of times a year, and I’m delighted to report that change is happening. Albeit slowly; this is the insurance industry after all.
Regulatory change and stringent policies are scrutinizing the sector, encouraging insurance providers to overhaul both their business processes and IT systems. For example, in Japan, insurers struggle with meeting their customer SLA’s based on FSA regulations. If in doubt, they tend to pay the claim rather than risk repercussions from the regulatory body. The way I see it they are leaving a lot of money on the table to avoid dealing with the issue.
One of the biggest drivers of change in South Africa is the fear of being left behind. No one wants to be left on the shelf with a dwindling number of policyholders. All it takes is one company to take action, stepping out of the comfort zone to innovate their claims department and ensure they are well positioned to be the market leader. But the one to take that first step is usually reluctant.
Ultimately, the fear of taking the plunge and investing in digital transformation is holding insurers back, right across the globe. On return from my trip, I was delighted to come across a news article interviewing one of our Australian clients, MLC, who took the plunge and invested in a digital transformation project back in 2016. This year they announced that they are able to offer health and wellbeing benefits by integrating modern apps and fitness tracking devices into their system to gauge their policyholders.
This is a fantastic development for MLC and it really does go to show that investing in modern technology can reap rewards, giving you a more competitive position in the market.