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By: Spiro Skias
As the insurance industry’s definitive marketplace for nearly 400 years, Lloyd’s of London is almost as synonymous with tradition as it was for its reliance on manual, paper-based processes. However, Future at Lloyd’s has embarked on a journey to digitally transform the marketplace by adopting modern insurance technologies.
For decades, flood insurance had been provided exclusively by the National Flood Insurance Program (NFIP); however, that is going through a drastic transition. Since the creation of the Write Your Own (WYO) program in the 1980’s, coupled with the increase in flood risks, there is a growing appetite to transition the market to the private sector, thus creating an emerging market. That means insurers will need the right technology to get in the game.
For decades, many insurance organizations have relied on the rates, forms, and rules distributed by The American Association of Insurance Services (AAIS) for the property and casualty (P&C) industry. Although AAIS provides a flexible and cost-effective standard, many insurance companies still struggle to adopt AAIS into their existing rating platforms. It’s not because AAIS is complex, but incumbent rating systems lack flexibility and are too difficult to manage; thus resulting in insurers manually rating those policies.
Oftentimes it is not what you build, but how you build it that makes all the difference. For insurers, the process of building products has a direct impact on speed to market, innovation, competitiveness, and meeting market demands. Unfortunately, legacy technology and traditional processes are ineffective in today’s market. Insurers need solutions that are configurable, simple, and easy to maintain. Low-code/no-code (LC/NC)software may be the answer.
By: Spiro Skias
For the first time in insurance history, technology has become a competitive driver for just about everything from consumer demand to emerging markets. However, insurance companies still struggle to adopt new technology fast enough – and the problem is Moore’s Law.
Although the concept of cloud computing has been around since the 1960’s, it wasn’t until 2006 when the modern understanding of “the cloud” became accepted. Even then, very few truly understood what “cloud” meant from a technical and business perspective, and that is especially true in the insurance industry.
Back then, insurance companies were accustomed to on-premise solutions which required massive IT to manage all aspects of their infrastructure, including hardware and software. There are a couple of reasons why this was the accepted norm. First, insurers had massive amounts of analytical data on their policyholders and they wanted to ensure that data was secure and accessible. Second, there just weren’t any other options at that time, and the thought of cloud-anything was scary.
By 2010, cloud options had matured enough that doubts previously raised by insurance companies were dissipating; however, there was still a hesitancy to transition from on-premise to the cloud.
As a workaround, insurance technology vendors began offering “hosting” within their own data centers. It gave the impression of a cloud service, but was still built around on-premise architecture.
Fast forward to today – insurance companies are still battling with cloud options, and many of the industry vendors continue to offer non-cloud solutions under the guise of being cloud-enabled. Fortunately, there are some key signals you can look for to avoid this common trap.
When vendors use terms like cloud-enabled, you can be sure that their solutions are not architected for the cloud and as a result, you will not gain the technical benefits that cloud offers.
Cloud-native software is designed with cloud-computing principles and leverages the full benefits of auto-scaling, dynamic performance tuning, and so on.
Traditional software that was architected for on-premise use, will only and always function as an on-premise solution regardless of where it is hosted.
When ClarionDoor was founded, we saw cloud computing as the future of insurance technology, and that insurance software needed to be architected from the ground up with APIs.
At ClarionDoor, all of our software is API-first and always, and 100% cloud-native – built and architected for the cloud exclusively on AWS.
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All of us have had to do some level of estimating throughout our careers, especially when it comes to insurance technology projects. Whether you are implementing a new insurance product, new software, or a new core system, estimation has become one of the fundamental metrics used to measure budgets and workload. To that end, estimating is extremely important.
The problem is that many insurance technology projects are egregiously overestimated.
It may sound like an exaggeration, but there are many insurance solution providers in the marketplace that have actually estimated 90,000 hours or more to implement their solution. It is hard to even imagine 90,000 hours.
To put it in perspective, it takes about 14,000 hours for a round trip to Mars. You could make about 6 round trips to Mars in 90,000 hours. Let that sink in.
Unfortunately, this has become the norm for many solution providers and it raises several red flags:
Although solution providers make claims of configurability and flexibility, anytime an estimate is that high is an explicit indicator that the solution is neither. Most likely the solution is just too complex and difficult to implement, requiring extensive custom coding to make features work that should already be functional in the product.
Even if the solution provides configurability, oftentimes the client will get in the way with high demands for customization. Unless you are implementing an emerging line of business that has never been done before, it is arguable that customization is not needed. The differentiator for insurance companies is not in the customized features in their core system, but it is in their products.
Sherman Kent, the father of intelligent analysis, once said that “estimation is what you do when you don’t know.” This is likely the more common scenario, but when a vendor proposes thousands of hours to implement their software, then the reality is that they honestly don’t know what it will take, especially for lines of business that they have previously implemented. The reality is that if the vendor has implemented their software for those lines of business before, then they should be efficient in their ability to deliver.
There are likely more red flags when hit with an out-of-this-world estimate; however, these are the initial ones that come to mind.
At ClarionDoor, not only do we use processes that actually get clients live, we bring clarity to our projects where the customer always knows what they are getting and when. By leveraging experiences gained from prior implementations, insurance knowledge, our unparalleled technology, and the experience of our team,
we are able to deliver our solutions faster than industry norms, enabling our customers to truly achieve speed to market.
We believe that insurance software needs to be flexible, configurable, and empower the customer to distribute products to market fast and seamlessly.
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Garagekeepers insurance is one of the most misunderstood and complex specialty commercial lines in the insurance industry. It often gets confused with garage liability coverage which leaves many businesses not properly protected, and with about a quarter million businesses impacted, this can be problematic. However, confusion about garagekeepers is only part of the issue. The larger challenge lies with insurers trying to launch and manage this complex line.
How you define your products and the speed to launch them are important for any insurer. Unfortunately, many experience the same frustrations shown in this month’s episode of Doorway – where even the most simplistic product change can become a nightmare. If this is your experience, then keep reading!
Santa Barbara, CA – April 2, 2020 — Property/casualty insurance carriers embarking on massive projects because “the system is too old” are making one of the most common technology mistakes in the industry, according to an executive of a technology company.
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