P&C Insurance Industry Insights: The Progressive P&C Insurer

The progressive P&C Insurer is enabling business transformation through new technologies and may have accidentally paved a new pathway to the Metaverse. But as does all change evolve, so does new risk.   

How will you manage the journey? 

The world continues to emerge from the grasp of a modern-day pandemic and the “new normal” has created a mass of hybrid remote workers.  Many of which are either future contributors of, or customers for, participation in the commercial viability of an embryonic Metaverse. These new customers are also demanding a new customer experience in everyday commercial services.   

How does the modern carrier evolve its internal operations with the needs of an emerging class of customer that also includes a balance of regulatory and emerging social pressures? 

Systems need to keep up with ever-changing regulations, emerging GAAP or IFRS standards, and now work from home customers/employees whose commute and lifestyle has changed dramatically.  Aging core systems need to transform into agile, adaptable platforms that can pivot towards change instead of avoiding it.  As a constant, changes in insurance regulation continue to force evolution of core systems or the popular migration to new cloud platforms to encourage innovation, manage risk, and create efficient growth.  

If you could wave a magic wand, what would you want your core policy management systems to do?

The insurance industries' greatest skill set has been how to turn risk data into innovation, aka revenue opportunities.  Many insurers are turning to the Cloud and inventive vendors such as Guidewire, EIS Group, Duck Creek, and new players such as Fineos and Instanda to enhance agility and responsiveness to changing market conditions.  New classes of technologies designed as low code alternatives for rapid development, such as Axway and players in the RPA space such as UiPath, AA, and Blue Prism have created pathways to extending the life of legacy green screen and homegrown applications.  Bending the current state of your policy management system may include augmentation instead of replacement.  Understanding the effect of that augmentation to shortcut the inevitable replacement should cause a pregnant pause in your solution delivery, as any transformative plan should, in order to well document the necessity and roadmap to eventual replacement.  It's good to save time, but at what cost to productivity, quality, and lost opportunity? 

Do We Build or Do We Buy?  And who is going to create and execute the plan for either pathway?

“Or do we do both?” is the more likely scenario many carriers gravitate towards.  Legacy systems in most cases are fragile and interconnected via other applications. And those applications require interconnectivity and maintenance adding complexity to compliance needs and change management.  To truly innovate in the name of growth or efficiency or maybe Customer Experience (CX), which also includes broker and field sales teams, creates a need to truly examine systems and their dependencies in detail and understand fully what the ramifications of unplugging a system in favor of new tech, really means.  The truth is, migrating to new tech is inevitable and necessary for the modern company to keep up with new customer demands, such as an enhanced CX as well as the ability to fulfil the needs of regulators, investors, and growth expectations. 

How many times per year does the NAIC impact your IT Operations?

By example, during the time of Covid, new considerations for regulation have been brought to light by the NAIC as novel measures to enhance their quest for uniformity and efficiency in U.S. policy administration adding or augmenting the various layers of protection in consumer interests. These propositions for 2021/22 alone, that include the likes of regulatory support functions, new safeguards for senior fraud, potential changes to insurer’s credit ratings via S&P, and climate related risks, have created additional risk metrics that continue to force the industry to comply and evolve.   

Has the Insurance industry become a disrupted Industry or is real change coming to an ancient Greek business model coming?

While the ancient Greeks and Romans can lay claim to the origins of insurance, it was Ben Franklin that organized the first commercial insurance company in 1752.  Here we are 270 years later and there are now emerging signals that the economics of the traditional agent model are beginning to be reconsidered.  Questions such as, “what role will my future broker/agents play in a very traditional system.”  Think about the reinvention of the virtual Real Estate market, virtual Banking, and even media streaming as disrupted industries.  How does the nimble carrier evolve?   In today’s world where customers are increasingly willing to conduct their business online, carriers can no longer afford to spend years building a seamless digital customer solution.  To create and implement next- generation solutions and business operating models, carriers will need speed and agility.  

Bob Seney - former CEO of Logimethods and now a Partner at Levio was asked about the topic of integration at scale:  “The move towards Agile project management as an iterative process to solution development, has created intensive focus on process frameworks to cope with change and the quality of deliverables.  Agile coupled with readily available cloud offerings is causing many carriers to take a closer look at what is commercially available in the “InsureTech” solution space, as most now offer features and capabilities that would take years for most carriers to develop in-house.  We’ve witnessed that adding Agile to the process insures compatibility and success of integration.”  

What does your digital roadmap for the next 5 or 10 years look like?

Carriers are beginning to form thoughts about commercial transactions in the Metaverse.  What will that look like?  Will salespeople actually appear in a virtual form or will the whole transaction be a new experience of interaction?  As key stakeholders in lines of business and IT accelerate their digital transformation efforts, many are also finding that they need to define and/or rethink their digital roadmaps. Unlike software design of the past, an integrated strategy for digitization is necessary to ensure alignment across all processes, systems, and include all key stakeholders in the front, middle and back offices. This requires deliberate thinking and design about impact across the lines of business and just what services the IT department can effectively handle. More than likely, this is when a capable third-party system integrator dedicated to the insurance industry, becomes the most important partner in the transformation plan.   

So what complexities lie in store for the progressive carrier that wants to migrate their platforms to either a new class of enterprise software or more likely cloud technology?

Change can only come when the complexities are exposed. Preparing for change and then managing through that change to achieve transformative value, requires an execution plan via a combination of external industry experts supported by your own knowledge team. To expect your own team to identify the complexities of change increases exposure to risk and may not provide complete visibility to external factors or shifts occurring in industry. 

Ivan Saldanha, Former BNP Paribas Chief Operating Officer Canada, was asked about common challenges across large enterprise modernization projects, “I’ve noticed a constant in every large-scale transformation project. If the organization desires to change out a core system, the biggest challenge isn’t in finding a good business solution. Rather, it’s how seamlessly does the chosen solution integrate with the rest of the IT ecosystem. In effect, all software projects are first and foremost, integration projects.  Understanding the impact to related downstream integration points remains the single biggest challenge to business transformation.  Commissioning a study or assessment to document the needs of key stakeholders, recorded against future business objectives, and process mapped to your legacy systems, is key to exposing deficiencies in the current environment.  Spending money on the documentation and analysis of your current state, cements the pathway for future state and will be later recognized as the money well spent.” 

We are Modernization. We are Transformative. We are Agile. We are Levio. 

Levio is a global consulting practice that does the work. The word Levio is derived from Latin and means to elevate and to simplify. These concepts perfectly capture our mission to make sense of complex transformation initiatives and deliver the expected benefits on time and on budget. Our distinctive approach brings together deep knowledge from our experts that come out of industry, multi-lingual staffing, superior project leadership, and cross-functional IT teams that can take on even the largest transformation programs.   

For more information on how Levio can transform your organization in system modernization, provide agile expertise, cybersecurity, artificial intelligence, or revitalizing your remote workforce environment, please contact us!