The insurance industry is undergoing a rapid transformation. Digitization, technological advancements, and changing customer expectations are driving the need for modernization in this sector. As a result, innovative paradigms are emerging, forcing traditional insurers to reconsider their roles and pursue new business models.
For instance, the Open Insurance trend is prompting companies to create more open and collaborative ecosystems, sharing data, resources, and expertise across the industry value chain to deliver more personalized, convenient, and efficient customer experiences. Another example is the Embedded Insurance approach, which aims to make insurance more accessible, convenient, and seamless by embedding it directly into the products or services that people use in their everyday lives.
Insurance players must adopt new technologies, embrace innovations, and pursue business agility to maximize these digital business opportunities. Cloud‑native technologies together with a new approach based on composability have the potential to transform the insurance industry. When implemented correctly, modern technologies, well‑defined enterprise architectures, appropriate tools, and effective work practices can accelerate insurers’ operations at a lower cost and deliver scalable, secure, and resilient solutions.
In this article, we will explore the benefits of these approaches and how insurance companies can leverage them to address the age‑old challenges of this sector.
The Challenges in the Insurance Industry
Insurance companies face several business and technological challenges that push them to find innovative solutions to maintain relevance. From a business perspective, customer expectations are radically changing, as policyholders expect to interact with companies in an omnichannel, digital‑first way. Therefore, self‑service insurance practices are replacing time‑consuming procedures or claims‑related interactions with agents. As a result, insurtech players are gaining importance, challenging the traditional insurance landscape thanks to their innovative value proposition that offer more efficient, transparent, and personalized experiences. The challenge for traditional insurers is to find a balance between preserving their existing strengths and embracing the insurtech paradigm’s opportunities by directly competing and cooperating with these players.
Insurance companies must rely on data to embrace digital trends and provide appropriate insurance products and services, but most of them still highly rely on legacy IT systems built over the last decades. These complex systems are inflexible and difficult to integrate with new technologies, dramatically slowing down digital transformation efforts and making it challenging to offer the customer experiences that insureds expect. Hence, it becomes almost impossible for insurers to perform decisions on a claim, engage in predictive analytics with curated and updated data, or speed up underwriting processes.
The massive reliance on legacy systems is usually coupled with a siloed organizational structure, mainly due to the mergers and acquisitions that have characterized the industry’s evolution over time. This data fragmentation makes it challenging to have a single source of truth for critical data and rely on a consolidated data architecture. Consequently, data cannot flow seamlessly within the company or between different organizations, and building the integrations required for bancassurance or embedded insurance partnerships still demands slow and costly procedures.
To tackle these challenges at best and make the most out of the market trends described above, insurance companies must rely on modern technological solutions and a composable business approach that can provide the flexibility, scalability, and agility they need to stay competitive in a rapidly changing environment.
The role of Cloud-Native Technologies in Insurance
Cloud‑native technologies have risen in recent years, and their potential impact on the insurance industry cannot be ignored. These technologies enable the creation and delivery of faster and more flexible experiences using containers, microservices, and APIs as major technological building blocks. The adoption of these modern technologies in the financial services sector has been slower than in other industries, but companies are increasingly pursuing a modernization journey that relies on these tools. By adopting a consistent cloud‑native strategy, insurers can be better equipped to meet customer demands, adapt to industry dynamics and be more resilient and agile with scalable solutions that deliver business innovation faster.
Cloud-native tools bring many key benefits that make them attractive to insurance organizations:
- It becomes possible to streamline core operations and create and deploy new products and services faster, responding at best to the changing market demands and making it easier to keep up with the competition;
- Partnership agreements are kept from being dragged down due to technological inefficiencies, as APIs are the perfect tool for sharing data and services because they are agnostic to the underlying service.
- Rely on a scalable and flexible environment that can easily handle large volumes of data. This is particularly important for insurance companies as they deal with a vast amount of data, from customer information to underwriting operations and claims data.
Composable Business in the Insurance industry
While cloud‑native technologies enable the creation of increasingly advanced, resilient, and rapidly adaptable software architectures and IT services, it is crucial for insurance businesses to acquire the culture of innovation and the methodological skills to take advantage of these tools. Gartner identifies this approach in the Composable Enterprise paradigm, where an organization can adapt to the changing pace of the market, dynamically combining the different business functions developed independently in so‑called Packaged Business Capabilities (PBCs). PBCs embrace the potential of cloud‑native technologies to communicate, inside and outside the enterprise, through standardized API‑based interfaces. Furthermore, these building blocks can be reused across the enterprise among different departments, increasing organizational efficiency and business agility.
The composable enterprise paradigm responds to the need of insurance companies to quickly create secure software and build new applications as needed through the combination of different features. From a practical standpoint, this means creating encapsulated software components that represent a well‑defined business capability (e.g., claims administration, underwriting procedures, document management) that can be easily recognizable to business users.
Key benefits of this approach in the insurance industry are:
- The elimination of siloed data architectures and the ability to adapt or change the applications more quickly;
- Modernizing legacy applications, replacing them with modular and easily adaptable software and service components;
- Overcoming rigidities and internal barriers that limit flexibility and change at the process and product levels.
By adopting a composable approach, insurance firms can streamline the complexity of their core processes, reduce operational costs and foster innovation to succeed in the market.
Mia‑Platform as a cloud‑native enabler of composable insurance
A reliable technological partner must support insurance companies to start their cloud‑native journey and embrace the composable business approach.
Mia‑Platform is a market‑leading cloud‑native platform builder that provides its customers with the best‑in‑class tools to speed up the adoption of cloud‑native technologies and manage all the necessary stages to embrace the composable enterprise paradigm.
- Mia‑Platform Console is the Internal Development Platform that improves the entire software development experience, speeding up its delivery and facilitating its governance. In addition, this tool allows to automate key insurance processes such as claims processing and notifications, reducing costs and improving efficiency.
- Mia‑Platform Marketplace is a comprehensive Service Catalog that provides an ecosystem of ready-to-use components. These components cover specific functionalities of the insurance business, such as the Digital FNOL or the Advanced Electronic Signature, and generic ones, like payment services, communication, geolocation, and more.
- Mia‑Platform Fast Data is the Data Fabric solution that allows to integrate data from core legacy systems (e.g., Life System, Non‑life System, Claims Management System), aggregate it according to business needs in Single Views (e.g., Subject, Policy, Asset), and securely expose it to channels in milliseconds. The solution allows companies to offload their systems from excessive workloads and rely on near real‑time data to enable valuable use cases like customer digital single registry or omnichannel customer care.
Cloud‑native technologies, together with a composable business approach, have the potential to transform the insurance industry. By leveraging solutions such as Mia‑Platform, insurance companies can transform their businesses, providing better services and experiences to customers and staying at the forefront of innovation.