Insly: Insurers spend 70% of IT budget on legacy maintenance

InsurTech Digital speaks to Risto Rossar, Founder and CEO at Insly on the ways insurtechs are innovating the insurance industry and the areas where digitisation is proving harder to achieve. 

How are insurtechs helping transform the face of insurance to a more digital proposition?

Insurtech is now established as a sector in its own right and has made great strides in transforming and digitising all aspects of insurance. 

At a high level, insurtechs fall into two main categories; those providing technology to insurance companies to help them to innovate, and then those providing new ways to distribute products, by combining technology with sales, and bundling products into a more innovative package. 

Finally, there are a few full-stack insurtechs, such as Lemonade in the US and Element in Germany, that have built a completely new digital business model.

In the case of insurance software platforms, these are now capable of automating every link in the insurance value chain, from product building to distribution, underwriting to claims, and beyond. 

This enables insurance providers to test and get products to market more quickly to differentiate their offerings and become more responsive to customer needs. It enables greater efficiency, fewer errors, and a more streamlined, positive customer experience from sales right through to claims.

Insurtechs are also helping to improve the efficiency of back-office insurance processes, such as finance and accounting, to keep track of invoices and payments, alongside detailed data, and reporting on risk and performance.

How are insurtechs able to foster digital transformation without disrupting the flow of daily business?

In years gone by digitisation was highly challenging for legacy insurers due to their specialised and highly complex systems and processes. 

That has now changed thanks to no-code software providers which are providing a modular, drag-and-drop approach, to automate operations and workflows without lengthy development times. Whereas previously digitising workflows would take months to complete, it can now be done in a matter of weeks.  

Digital transformation inevitably brings some level of disruption, but there are ways to minimize its impact. Insurers should aim to simplify technology implementation as much as possible, by utilising modern, no-code solutions with What-You-See-Is-What-You-Get (WYSIWYG) editors to decrease the complexity and stress of technology adoption. 

These tools provide intuitive interfaces that enable easier implementation, reducing the disruptive effects on daily business operations.

Insurtech solutions are also now easier to integrate with existing legacy systems through modular approaches and application programming interfaces (APIs). By selectively integrating specific modules or APIs, insurers can enhance or replace targeted functions within their operations without requiring a complete system overhaul. 

Adopting an incremental implementation strategy rather than a large-scale, all-at-once approach helps to minimise disruption, allowing for smoother transitions and adjustments.

Finally, firms should secure team buy-in early on, ensuring that the entire business understands the purpose and benefits of digital transformation. 

By emphasising clear communication, you can foster a collaborative environment. Celebrating small victories along the way will help maintain team morale and make the process more manageable.

Why is it proving difficult to innovate around P&C insurance? 

Governments and regulators have created such a high barrier to entry that it has been difficult to innovate P&C insurance from the ground up. As an insurtech, you need at least one insurance company to buy your products, or to give you the authority to sell insurance, otherwise, you can’t innovate. 

Hence the success of insurtech has very much come down to collaboration between the different players involved, which has taken time to establish.

Regulations not only create barriers and slow the pace of innovation, but they also tend to favour larger insurers that have the resources and capacity to navigate through regulatory requirements. 

These bigger players can dedicate significant time and funds to comply with regulations, giving them a competitive advantage over smaller, more agile players.

Furthermore, increased regulation often leads to consolidation in the industry, as smaller players may struggle to meet the compliance standards. 

This consolidation benefits larger insurers, as it reduces competition and allows them to allocate more financial resources toward innovation initiatives.

What is the most important thing legacy insurers need to do to modernise? 

Legacy systems are difficult and expensive to upgrade in a way that meets changing business needs. Research has shown that insurers allocate an average of 70% of IT budgets to maintaining outdated, out-of-the-box solutions. This is a vast, wasted expense. 

No-code solutions are a good compromise as they can integrate with existing legacy tools and help companies to evolve their systems and move towards fully automated workflows on an incremental basis.

Insurtech solutions are now easier to integrate with legacy systems through modular approaches and application programming interfaces (APIs). 

By selectively integrating specific modules or APIs, insurers can enhance or replace targeted functions within their operations without requiring a complete overhaul of their legacy system.

What considerations must insurers make when considering an update to their systems?

One final consideration is data security. Overhauling IT infrastructure can put insurance data governance and cybersecurity at risk, especially if critical information is stuck in inaccessible IT silos and disparate legacy systems. 

No code software tools remove this risk by harnessing cloud computing, which not only provides limitless data storage in the cloud – reducing IT overhead costs - but also automatically updates to incorporate the latest regulatory compliance protocols. So, providers won’t ever have to worry about data governance risks.

******

For more insights from InsurTech Digital, you can see our latest edition of the InsurTech Digital here, or you can follow us on LinkedIn and Twitter. 

You may also be interested in our sister site, FinTech Magazine, which you can also follow on LinkedIn and Twitter.

Please also take a look at our upcoming virtual event, InsurTech LIVE, coming on 18th-19th October 2023. 

******

BizClik is a global provider of B2B digital media platforms that cover Executive Communities for CEOs, CFOs, CMOs, Sustainability Leaders, Procurement & Supply Chain Leaders, Technology & AI Leaders, Cyber Leaders, FinTech & InsurTech Leaders as well as covering industries such as Manufacturing, Mining, Energy, EV, Construction, Healthcare + Food & Drink.

BizClik – based in London, Dubai, and New York – offers services such as Content Creation, Advertising & Sponsorship Solutions, Webinars & Events.