Many insurance companies are suffering from the negative effects of historically low interest rates in a low-growth business environment. Under these circumstances, it's key to modernize systems to reduce operating costs, and improve the ability to launch new digital offerings to better connect with customers.
A recent Computer Economics report shows the urgency for insurers to address the legacy technology issue: 100% of respondents to its survey listed systems modernization as their top spending priority.
Insurance companies are responding to challenges by beginning to modernize to a cloud environment. This not only lowers IT infrastructure costs and improves time to market, it opens up platforms to digital systems of engagement. The modernized digital platforms, with the help of APIs, let companies improve customer engagement so they can remain competitive.
As you think about heading down this road to reap the benefits of modernization, consider following one (or more) of these paths to success:
Cloud migration. Moving to a cloud environment not only reduces your IT infrastructure costs and speeds time to market, but helps you improve customer engagement so you can remain competitive. A modernized IT infrastructure provides better access to pay-as-you-go services and the increased agility enabled by the cloud allows you to roll out new product offerings faster.
A cloud environment helps you deliver fully digital offerings to customers in many ways, including leveraging the power of APIs to facilitate interactions between applications and devices. A modern solution such as the DXC Assure Digital Platform gives insurers the ability to deploy APIs to better engage with customers across multiple channels via all devices, including smartphones and tablets.
In addition, a cloud solution solves the problem of older legacy applications not being up to current cybersecurity standards. This is critical for maintaining compliance with regulatory requirements around data security and privacy. In a cloud environment apps can run in segregated containers to give you more control over managing data.
A cloud environment also bolsters the productivity of DevSecOps teams by allowing for a more standardized and centralized platform for testing, deployment and production.
IT infrastructure outsourcing. Upgrading your IT infrastructure to a modern tech platform and architecture provides the underlying foundation to support a more advanced and dynamic operating environment. Having a third-party run and maintain your data center frees up capital and allows you to focus on your strategic core competencies.
You'll be able to simplify and optimize your technology estate, reducing the costs to run it. Examples include re-platforming applications, enabling APIs and consolidating multiple systems into one. You'll improve network services and business continuity, too.
Another benefit: An IT service provider can take advantage of the global scale and expertise that their partner ecosystem can offer, providing capabilities that an individual insurance company simply does not have access to.
Business Process as a Service (BPaaS. When seeking to drive down or better predict the costs of routine tasks such as policy administration and claims management, outsourcing business processes makes perfect sense. Effective BPaaS can deliver benefits such as reducing transaction processing times, accelerating time to market and improving customer satisfaction.
DXC has delivered these benefits to some of the biggest life insurance companies in the world. Depending on the customer's need, we simplify the IT environment by converting policies to modern platforms, resulting in lower costs and improved efficiency.
Another advantage of outsourcing business processes is the financial edge it can provide. For example, in some countries - including Canada, where I am based - the capital reserve structure is focused on knowing what your operational costs will be from year to year. Contracting a third-party administrator for insurance BPaaS provides future cost certainty and operational savings, and these savings are likely to reduce capital reserve requirements.
Reaching your modernization goals
Which of these three paths to modernization is best? It depends on your specific needs, and a hybrid of two or three of them could be the best way forward. Companies need to start by clearly defining what business problems need to be solved. A trusted partner with deep industry and policy conversion experience can help you identify what path, or paths, best meet your needs.
It is crucial to have a partner with the expertise required to deal with country-specific privacy and security regulatory compliance issues. DXC operates an insurance services delivery center in Canada that provides tax and regulatory support tailored for Canadian insurers. We also have the compute resources that allow carriers to keep customer data inside Canada's borders, and we offer similar capabilities in countries throughout the world.
There are several excellent modernization options to help reduce the complexity and costs of maintaining blocks of business while supporting the launch of new digital products. For insurers, the time for transformation is now.
About the author
Jeff Williams is President of DXC Insurance Services Canada and the Americas leader for insurance at DXC Technology. In this role, he is responsible for DXC's Americas insurance strategy, vision, client satisfaction and operating performance.