Insurers need to adapt with the times and push ahead with innovation in order to stay competitive, writes Garry Larner, Regional Director for Financial Services UK&I, OutSystems
For a long time, big insurers held all the aces. Decades of brand history, the protective effect of stringent regulation and large balance sheets kept competition at bay. This is now rapidly changing. The new players on the block hold the cards of agility, innovation and freedom from the millstone of legacy technology. They can use AI, cloud and IoT technology to meet escalating customer demand for highly personalised, seamless mobile digital services.
The declining loyalty of increasingly ‘switchy’ customers has fundamentally changed the game. In order to remain at the table, long-established insurers need to rediscover their innovation mojo.
Three steps to future relevance
Insurance companies have three big challenges on their plate right now and they touch every part of the organisation from IT systems, to management, to organisational culture.
First, they need to improve profitability by bringing down their cost base, becoming leaner and more efficient. Second, they need to expand their ecosystem, bringing in as much business as possible while competing strongly with newcomers to the space. Third, they need to innovate and bring new products and customer experiences to market much faster. Ultimately, customer experience is the battleground where the competition will be won or lost.
It’s therefore vital that insurers achieve steps one and two as quickly as possible, so they can put energy into the third stage, which is where the future of the business will be determined. Digitisation is the accepted route, but here legacy technology rears its head.
CIOs of large insurers face a conundrum. To deliver the transformational change that’s needed at the speed required, should they rip out and replace the existing IT systems? Tempting though it is to start with a clean slate, it’s a big and expensive risk that will need time that’s not available. The alternative is to work with and extend what they’ve got, with all the historical integration challenges that entails.
The key to resolving this tension is to recognise the vital role that innovation needs to play in all three steps described above and operationalise it.
Historically, bringing a new insurance product to market took months or even years. Today we simply don’t have that kind of timescale. A product that takes too long to build risks being obsolete before it ever sees the light of day. That’s why it’s not just important that we innovate, it’s vital that we operationalise it throughout the organisation, delivering frequent, innovation-led outcomes.
To effectively operationalise innovation requires cross-functional collaboration and a rediscovered pioneering mindset. Think of it this way: an app is like a Hufhaus – one that can be built in just three days - yet today, building that house requires planning permission, which is a lengthy process. The housebuilding process has been disrupted, but the ecosystem around it is out of date. It involves town planning and management. Most companies have now become process-driven town planners, but in order to get new houses (apps) built at the speed required, they need to re-engineer the ecosystem.
By adopting agile development practices, insurers can dramatically shorten time to market. Instead of lengthy analysis of requirements and hand-off to IT, business stakeholders and IT need to collaborate and innovate at speed.
This is where low-code rapid application development comes into its own. The fast, visual, drag and drop approach is up to ten times faster than traditional coding. This faster pace allows business representatives and developers to work side by side. Rapid prototyping and regular demonstrations ensure that development stays on track, typically delivering new web or mobile applications in days or weeks, instead of month or years.
Faster low-code development enables a cultural shift that breaks down silos and turns IT into a collaborative innovation enabler, instead of an order taker.
The great thing is that nothing is off the table. By deploying a low-code platform, insurers still have access to all the power, stability and big data capability of legacy systems, but gain the ability to wrap the most advanced customer experiences around them. It’s less risky and costly than replacing legacy systems and it gets products to market faster.
At OutSystems we’ve already seen this approach pay dividends for numerous insurers. Take Portuguese insurer Liberty Seguros, for example. This was a company experiencing all the challenges of disruption – products weren’t getting to market fast enough, there was a two-year IT backlog and customer demands were ever-increasing. Serving a shrinking market of small independent brokers, Liberty knew that to survive it needed to become the easiest, most efficient company for brokers and policyholders to deal with.
It made the bold move to deploy a low-code platform back in 2004 and built its first app to help customers with medical insurance claims, effectively raising the standard for post-accident medical care for policyholders.
From those early days, the company has developed 83 web and mobile applications and seen policy growth of 274 per cent, in a static market. By fully operationalising innovation, Liberty Seguros has significantly grown market share, improved customer and broker experience, and saved millions of Euros by retiring old and inflexible IT systems.
Therefore, if you want to escape legacy debt, and get to market sooner with new products and associated web and mobile solutions, the right low-code platform will give your innovation the boost you need, to delight your customers and outsmart the competition.