19JUNE 2019Legacy Modernization in the Age of InsurTechBy Brahm Sharma, Chief Information Officer - Digital Business Transformation Executive, AonCXO INSIGHTSThere is a lot of excitement around InsurTech. According to CB Insights, the number of funding deals in InsurTech increased from 91 in 2014 to 173 in 2016. Investment in Q3 of 2017 was 35 percent higher than in Q3 of 2016. This high level of investment, support, and excitement is bound to bring innovation into the insurance industry in general and the technology related to insurance in particular. At the same time, the insurance industry has not been on the forefront of technology innovation or adoption. Traditionally, insurance companies have been very risk-averse and conservative when it comes to experimenting with any new technology. They wait for other industries to adopt any disruptive or new technology and allow it to mature before they start adopting it. Even when a new technology is embraced, there are companies that adopt them quickly (the "early adopters") and others that wait until they cannot live without it (the "laggards").InsurTech offerings can be categorized into two major groups--Evolutionary and Revolutionary. Evolutionary offerings are the "General Technology Trends" such as Software as a Service (SaaS), Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Artificial Intelligence (AI), Internet of Things (IoT), Cloud Computing, Big Data, Advanced Analytics, Machine Learning, etc. In addition, this category includes "Insurance Industry-Specific Technology Trends" such as Automated Underwriting Engines, Modern Policy Management Systems, New Claims and BillingSystems, etcetera.Revolutionary InsurTech offerings present more "Disruptive Trends." These include innovative insurance products such as Peer-to-Peer Insurance (Friendsurance), innovative metering (Trov), innovative processes (WeGoLook), and innovative hardware (Plumis), or innovative technology such as AI-based automobile damage assessment through analysis of photographs (NGRAIN). As InsurTech companies bring in innovation to all spheres of the insurance industry, from new products to novel ways of distributing these products, there will also be innovation in all aspects of the insurance process chain, from marketing to fulfillment and from underwriting to claims processing. At the same time, a number of insurance companies are still using legacy systems to run their business. A few of them have roadmaps to modernize their technology and others are in the process of creating such plans. A key challenge these companies face is figure out how to leverage opportunities generated by InsurTech during and post modernization phase. These technology modernization roadmaps must have a few key provisions that will position them to leverage current or future opportunities that InsurTech may offer. These provisions will position the insurance companies to not only survive but also thrive in the age of InsurTech. A legacy modernization strategy must have the following key aspects to leverage the opportunities presented by InsurTech companiesa. Robust API Management Framework with DevOpsb. Data Lakec. Flexible Business Process Management (BPM) Layer
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