9MARCH 2020flexibility. The most effective and competitive carriers will be those that re-leverage the same services and APIs used with insurtechs within their own internal applications. Risk management. McKinsey points out that, with a rapid proliferation of commercial insurtechs, many commercial insurers struggle with how to identify those with whom to invest and collaborate, and that some are "sitting on the sidelines." This inaction shows a lack of awareness of forces shaping the commercial market. The goal should be making sure that systems are as flexible as possible so that they can easily integrate with the maximum number of different players with the least amount of effort. This helps manage risk that any particular insurtech with whom an insurer does business loses market share or fails altogether. Improved data governance. In undertaking our own systems transformation, one of the biggest early revelations was the importance of addressing our data first. Like many insurers, Acuity had a history of data produced by and stored in multiple systems and, with that, some expected data quality issues. When we set out to extend our back-office systems, we first got our data in order, ensuring the integrity of data and creating data consolidation. There are other benefits to undertaking that exercise was well, including improved data governance, consistency, and standardization. It also improves data control and allows a company to achieve better data classification and security. For instance, if an insurer has personally identifiable information (PII) stored in a dozen systems, all 12 need to be secured. Having that data in only one central place simplifies that process. Lastly, it's important for insurance CIOs to recognize that supporting insurtech integration in commercial lines is only partly a technological issue, and that the other part is a business issue. Even when the benefits of transformation are recognized, there can be resistance to allocating the resources necessary for it because of the history of commercial lines processing, which often involves complex scenarios and human decision-making. CIOs must be able to articulate the benefits of extending backend processes, even if a company does not intend to immediately integrate those processes with external insurtechs. The bottom line for insurers is that, just as in personal lines, customer expectations will drive disruption in commercial lines. You have the opportunity to position yourself and capitalize on change before you fall behind.
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