As published in FA News
As technology steamrolls its way into the future, insurers are increasingly relying on a multitude of specialist insurance technologies to provide specific services. They need to be interconnected and must all speak the same language.
Say an insurer wants to sell its products through a partner network of retailers whereby the insurer embeds its product in the retail distribution channel at the point of sale.
Software at the point of sale can include a simple interface to enact the transaction. However, it is programmed to only capture minimal client information seeing that the product being brought (information) is already known to the insurer and does not need to be recaptured.
The insurer, requiring control of the insurance information, also does not want the point of sale app to include rates, rules and policy schedules. It needs to allow the software to talk with an application programming interface (API) which concludes the deal and all the rest without the point of sale software catching whiff of the details privy only to the insurer.
It may take some convincing from the insurer for the Point of Sale (POS) developer to build their product into the POS development life cycle, which is why the API needs to be as easy to integrate as possible.
Sound complicated? The software may be, but the process should never be.
We recently completed an integration for an InsurTech company that wanted to add value to the claims process by providing intelligent vehicle accident analysis using data from tracking devices as the tracking system knows the details of the incident much better than the claims system.
By providing an integration that passes on the tracking device ID and the date and time of the incident to the tracking company, they can deliver a full analysis of the claim, including an analysis of probable liability and injury.
Why is integration necessary? In a single platform, the business rules are applied by the application, essentially meaning the application can trust and understand the data without the need to communicate with other platforms that may be speaking a different language.
The issue is that the system would become enormous if all the new insurance business requirements were coded into this single platform.
The current trend is to rather integrate various specialist services provided by different specialized companies. These services must be able to communicate digitally, in other words, integrate.
The opportunity is too big for any one supplier to provide a complete solution. Companies specialize in providing data enrichment services that cannot be provided by a single platform supplier.
Integration into these services provide a much richer experience for any insurer than one platform as a service (PAS) supplier can provide on their own. These service providers must publish their API in such a way that it can be consumed easily by other platforms.
PAS providers must provide third parties access to their platform to extend the business to their partners and ultimately their clients.
Clients can interact with this system using mobile apps, bespoke user journeys and portals. The nature of this interaction all depends on a common understanding of the business rules as stipulated by the insurer.
Claims, underwriting and data enrichment are just some of the aspects vital to a product provider. Something else that is vital is the ability to sell their products more easily.
Front end distribution has often been a difficult integration for insurers and UMAs. With technology, this barrier can be broken down relatively easily.
InsurTech is about adding value to the insurance industry through intelligent use of technology which can be achieved through automation, artificial intelligence, data enrichment, mobile always-on, or a combination of the above.
There is a lot of hype around this technology, but the real benefit will be in improved business practices for insurers and ultimately benefit their clients. Those who fail to add value will fall away; those that add value will grow.