22. July 2024 By Dr. Volker Mull
Insurers operate on the open heart
Many insurance companies are undergoing radical change - existing systems are outdated and need to be modernised, while the market and business environment are changing dramatically. Young customers expect flexibility and speed when interacting with their insurance companies, similar to their shopping behaviour on Amazon and Google. Insurance portals and comparisons are already well established today. Their use for the direct and immediate conclusion of contracts will increase, for example for taking out foreign travel health insurance when boarding a flight or for taking out sports insurance before a diving holiday. For this "customer journey", insurance systems need to be modernised and processes expanded.
Today, processing is carried out by well-trained employees who are familiar with the processes and are at home with the established procedures. Increased efficiency is to be achieved through the digitalisation and further automation of processes. The use of artificial intelligence will revolutionise insurance processes in the near future - and the application landscapes must be prepared for this.
Technically, mainframe-based core systems are often still in use: operation, technical maintenance and care or even further development are becoming increasingly expensive, as it is difficult to find suitable new staff, the infrastructure needs to be renewed and knowledge of these systems disappears as employees retire.
Realignment of the corporate strategy
Many insurers are faced with the need to fundamentally change their system landscape. A distinction can be made between three strands of action:
- Technical: Existing systems are modernised.
- Technical: Processes are digitalised. Efficiency increases are necessary.
- Strategic: The system landscape must be made fit for the future.
The following table shows these transformation goals and the measures derived from them in more detail. Of course, the strands of action run in parallel and the measures must be harmonised.
Strands of action in the transformation of today's insurance systems
Selection of systems
Which systems can or must be modernised and in what order? An evaluation is carried out on the basis of an analysis of the existing system landscape:
- Overview of the application and system landscape with data and process dependencies
- Inventory of the technologies used, homogeneity/heterogeneity, interoperability
- Business context and implementation of the business strategy
- Measures implemented, decisions made and technology specifications
The basis for decision-making is the evaluation of the individual systems:
- Weaknesses in functionality and technical criticality
- Up-to-dateness of the technologies used (e.g. programming languages)
- Existing risks for maintenance and operation
- Costs for operation and maintenance
- Staffing levels and availability of the necessary skills ("lack of young talent")
A one-to-one replacement of a system through a pure technology change is often not recommended, as individually developed systems tend to preserve the state they were in when they were created. They are resistant to substantial further development.
Platforms as the basis for future-proof solutions
The use of an insurance platform is a strategy for implementing requirements through standard functions and their targeted customisation. The risk of customised development is reduced. Development activities are reduced to customising, i.e. adapting the standard software.
As a platform, adesso in|sure ecosphere offers software solutions for core insurance systems such as portfolio, benefits and partners. Business platforms have also become established in many other areas.
A platform offers:
- an abstraction layer that separates functions and services from their concrete technical realisation,
- the possibility of successively expanding the functions and systems used ("modular system"),
- participation in general software development through release capability,
- standardised standards and procedures for cross-sectional tasks (architecture, operation, security, integration, data management, process control, monitoring),
- reduction of complexity and risk and
- future and planning security.
Figure 1: Business platforms offer a modular system for functional and non-functional aspects. They can be integrated into the existing landscape and create the basis for standardised data exchange with service providers, marketplaces or ecosystems.
Dealing with the legacy system landscape
Data migration must be planned and implemented for the transition from legacy systems to a platform. When the platform is introduced, there is a transition phase with parallel operation and finally the replaced system is decommissioned.
The remaining systems must be supplied with data. Modern platforms offer configurable interfaces and a flexible integration concept, thus enabling a seamless connection.
Customisation and flexibilisation
When using an insurance platform, it is necessary to implement the individual requirements and framework conditions. This is done in three steps: Use of standard functionality, adaptation through customising or individual development.
Figure 2: Adapting the platform through customising and individual extensions
- 1. The standard of a platform... ... forms the basis through necessary business functions and services.
- ... is continuously developed and delivered in regular releases.
- ... is orientated towards best practices in the insurance industry.
- ... takes into account legal and regulatory requirements.
- 2. Customising enables the standard software to be adapted in the intended places. Customer-specific properties of the platform systems are set. It includes... ... Extensions to the standard functionality at defined points.
- ... Configuration or modelling.
- ... Definition of rules.
- ... Adaptation of interfaces and control of processes.
- ... Adaptations or extensions to the data model.
- 3. Customised development...
- ... is carried out to realise specific functions and features.
- ... builds on the services of the standard.
- ... is decoupled and separate from the implementation of the standard software.
Platform architecture: digitalisation and open standards
The integration of the platform into the company architecture takes processes, applications, data and infrastructure into account.
Cloud providers and service providers can be integrated for infrastructure and IT operations. Virtualisation and IT management processes form the basis for modern IT operations. All relevant non-functional properties (performance and capacity, availability, IT security and data protection) must be taken into account.
The data and integration architecture is of particular importance. Future interactions with other market participants, e.g. brokers, appraisers or value-added services, are based on standardised data exchange and overarching processes. Standardisation initiatives such as BiPro or OpenInsurance are driving the change and standardisation of data structures. New regulatory requirements such as VAIT, FIDA or BFSG also require the standardisation of data and processes.
Accompanying measures for transformation projects
In addition to the conversion of technical systems, change projects also include the adaptation of organisational structures and processes. Professional change management is particularly important to ensure that such transformation projects succeed and are accepted by all those involved.
Many other areas of responsibility and organisational units have to participate in the transformation or adapt their own processes. The most important key topics are shown in the following diagram.
Figure 3: A successful transformation encompasses other areas of activity and organisational units
Accompanying a transformation
adesso has been supporting its insurance customers with successful modernisation and manageable transformations for many years.
Our business experts and architects provide support in analysing the system landscape and defining a target picture, drawing up a roadmap and defining the key objectives and milestones.
During the transformation projects, adesso supports you in the implementation of the projects and accompanies you in achieving the set goals.
Would you like to find out more about exciting topics from the world of adesso? Then take a look at our previous blog posts.
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