Insurance technology software provider, Majesco, said a new generation of cloud business platforms, Digital Insurance 2.0, are the stage from which re/insurers will achieve the digitisation of internal processes as well as bring new digital insurance solutions into the market, in its latest report on the capabilities of cloud platforms for insurers.
New capabilities created by advances in digital technology, the emergence of new competitors and the blurring of market boundaries are creating a seismic shift between the business model that worked in the past and the model that is needed for the future.
As a new business platform that utilises digital efforts to reconstruct a model with fewer barriers between systems, Digital Insurance 2.0 is a silo-less, or silo-reduced, insurance operation that appears to hold the promise the industry has been waiting for.
“Today, we are seeing both the ‘deployed in the cloud’ and the ‘born in the cloud’ core insurance solutions that are a new generation of cloud platform solutions,” said Manish Shah, Executive Vice President, Products at Majesco; “First, cloud platforms have become the option of choice for insurers looking to modernize their core systems and existing business models, and in some cases, Greenfield or startup operations that are offering digitally-enabled traditional insurance products.
“Second, cloud platforms are the basis of a new generation of systems based on a micro-services architecture that is needed for innovative new insurance products like on-demand and micro-insurance offerings.”
A cloud business platform is one that can run key business applications and services in order to match the reality and requirements of the current business environment.
It creates a new business model paradigm marked by collaboration via data and information sharing and subscribing, not owning.
As a result, traditional boundaries between insurers, partners, third-parties and even other industries are being replaced with new market dynamics that open doors to improved operations and revenue outcomes.
“The shift is toward a platform economy across all industries. Insurers are beginning to innovate new business models based in this platform economy, which enables them to leverage broad ecosystems and technology innovations such as cloud computing, artificial intelligence, machine learning, and new data sources to create a greatly enhanced customer experience,” commented Denise Garth, Senior Vice President, Strategic Marketing, Industry Relations and Innovation at Majesco.
A digital platform economy is emerging on a global scale as the use of big data, artificial intelligence, and cloud computing is changing the nature of work and the structure of the economy.
Companies such as Apple, Amazon, Netflix, Facebook, Google, Salesforce, and Uber are creating online structures that enable a wide range of activities, opening the doors to radical changes in how we work, socialize, create value in the economy, and compete for profits.
The Majesco report explained that platforms have overtaken pipelines because platforms scale more efficiently by eliminating gatekeepers; “until recently, most businesses were built around products, which were designed and made at one end of the pipeline and delivered to consumers at the other end.
“Today, plenty of pipeline-based businesses still exist – but when platform-based businesses enter the same marketplace, the platforms virtually always win.”
A gap is growing between the business model of the past and the business model of the future.
There is also a gap between what carriers know about the changes, and what they are doing about them, placing unresponsive insurers at risk of irrelevance, Majesco warned.
For an effective digital transformation, it is important that digital fusion occurs, where core, data and digital capabilities are decomposed, available as micro-services for integration, and are “fused” together for designing a digital experience.
“A new generation of insurance buyers with new needs and expectations creates both a challenge and an opportunity that a platform-based Greenfield and startup business model can incubate, launch and grow,” said Garth. “The time for plans, preparation, and execution is now — recognizing that the gap is widening and the timeframe to respond is closing.”
