Insurers focus core replacements on digital enablement
More than half of insurers with more than $1 billion in direct written premium cite support for digital customers as a main driver of core-systems replacement projects, according to new research from SMA.
The insurance technology analyst firm surveyed 105 insurers about their core systems replacement drivers for its "Bridging to the Future with Core Systems Modernization" report. Report author Karen Furtado says that life insurers are especially focused on supporting digital customers. The benefits, she adds, go beyond simple customer acquisition.
"When insurers put the capabilities in place to provide this kind of support to their customers through modern core systems, they also gain the ability to expand the digital experience to anyone in the insurance ecosystem trying to transact against their core systems" like customer service representatives, Furtado explains. "Digitizing across the enterprise also gives insurers the opportunity to increase efficiency and adaptability through the automation of sophisticated rules and workflow."
Overall, SMA found that 32% of P&C insurers and 18% of life insurers are in the process of implementing policy administration systems. The most common drivers for deciding to invest are cost efficiencies and supporting growth. However, supporting digital interactions is growing in importance as well. One in 10 insurers is looking to support smart devices and the Internet of Things with their next core system, for example.
"Support for smart devices reflects the potential of integrating emerging technologies, new data sources, and insurtech with insurers’ core environments," Furtado writes. "That percentage will only increase as the use of emerging technologies and data matures."
Potential interaction points between IoT and core systems include, according to Furtado:
- Self-reporting claims
- Integration with insurtecs
- Leveraging chatbots for claims communications