Insurers continue to invest heavily in revamping core systems like policy administration, claims and billing. But they have to be careful that their strategy delivers the business value that’s driving the desire for replacements.

That’s according to a recent PwC report, “P&C insurance core transformation: Exploring the possibilities.” While two-thirds of insurance CEOs “see digitalization and innovation as very important to their organizations,” according to a PwC survey, insurance companies tend to share three common oversights that belay this goal when replacing core systems:

Digitization without differentiation: Projects that simply upgrade their core systems but fail to change the customer engagement
Limited focus on information data: Too much focus on transactional data elements and not utilizing a comprehensive informational data approach
Failure to foster innovation: Modernizing applications but failing to leverage these tools to support continuous improvement and innovation

PwC says that there are four key opportunities that insurers should keep on their radar when replacing core systems in order to deliver on the full promise of digital. Click on to find out.
1. Align digital and core strategy
PwC says that portal offerings have matured in recent years, which means that carriers can take the customer experience into account earlier in the core replacement process than was possible previously. This allows adoption of a top-notch digital experience without requiring major reconfiguring of either the front or back-end systems.
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2. Big data and analytics
Insurers are implementing new data storage and reporting technologies at a rapid rate. While carriers work on migrating their core systems, they should consider getting a chief data officer to ensure that the new technology environment will be able to leverage fully the promise of the carrier’s own wealth of data, PwC recommends.
3. Building innovation infrastructure
Replacing technology isn’t a means to an end on its own, PwC notes. The consultancy recommends that insurers implement an innovation model that:\

-Captures innovative ideas across the company through the use of innovation labs
-Funds and prioritizes projects according to capital and business needs
-Is willing to fail early and often
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4. Adding insurtech to the equation
Lastly, PwC says insurers should be open-minded – especially as part of their innovation strategy – to the growing community of insurtech companies that can add value to their new technology environments. This can take the form of joint ventures, strategic partnerships, acquisitions or more traditional service provider relationships – whichever the carriers is most comfortable with from a risk standpoint.

“It will remain unclear who will ultimately become leaders within the space. As a result, insurers should look to a combination of partnering models to hedge against an uncertain future,” PwC concludes.