Insurance carriers often ask us how they can streamline core processes, improve insight and enhance their customer relationships. They want to focus on their business, not on their IT, and modernizing the core environment could be the key to achieving those goals.

Why modernize?

The 1990s and early 2000s saw many insurance businesses grow through merger and acquisition activity. As a result, many carriers today are operating with a number of disparate systems that perform the same core functions. Those systems could be point solutions, in-house developments or part of a suite – but whatever the combination, all that technology needs to be managed, and there’s a cost associated with that.

At the same time, our customers in the insurance sector want to grow their premiums, price their policies more effectively, stimulate product and service innovation, address complex regulations and attract a new generation of customers and employees. To do that, they need to ensure better and faster insight into the data across business units so they can get new products to market faster and make sure they’re in a position to lower costs, increase revenues and deliver more value.

Core modernization is fundamentally about helping insurance carriers get back to their core business, and many insurers are now re-evaluating their core IT to make sure it aligns with their current and future business priorities. Core business functions such as billing, claims processing and policy administration may not have changed much over the years, but we can use technology to improve them by standardizing on the process, workflow and tools. With the efficiency and data insight that a companywide view delivers, carriers can ensure a 360-degree view of the customer that enables them to gain greater insight into the value of the relationship and help to strengthen the bond between the customer and the carrier. They can streamline operations, pay claims faster and issue policies more quickly, and, they can use the wealth of information available to them to enhance their risk management capabilities.

Evaluating approaches

There are several flavors of core modernization to consider, and we like to facilitate discussions with each customer to find the approach that is right for their business. Some of our customers are looking at point solutions with niche players, for example, while others are completely revamping their systems with a suite such as Accenture Duck Creek. A carrier might choose to buy an application, implement it and run it in-house, or to adopt a Software-as-a-Service (SaaS) model where the application is deployed in the cloud and managed by a third-party provider. In addition, some customers choose a hybrid approach that combines on-premise technology with the power to use cloud resources when needed.

Of the approaches mentioned above, SaaS implementations suit many carriers well, and we’re seeing increased activity in this area. Again, this comes back to enabling carriers to focus on their core business. Insurance carriers are not in the business of building software unless it gives them a competitive advantage, so it often makes sense for a standard system to be managed by a third party who can take care of issues such as upgrades, capacity and data centre modernization. A recent example is Berkshire Hathaway Specialty Insurance (BHSI), which decided to standardize on Accenture Duck Creek in the cloud so that it can focus on the business of insurance instead of putting too much effort into providing IT services.

Start the discussion

There is no getting away from the fact that modernizing your core environment can be a complex business. You may need to think about consolidation and rationalization before you consider whether – and how – to modernize your core systems. But a modernized core environment can deliver unprecedented benefits across the organization, and the capabilities and expertise are available to help you make the right decisions for your business.

At Microsoft we’ve run performance tests relating to some of our top policy administration systems on premise, in the Azure cloud and in hybrid environments, and the results are good. While we do see good performance in Azure, we know that with the constant improvements to our resources, performance will only continue to improve in Azure. We have an extensive set of relationships with partners across policy administration, claims and billing, who will work with you to make sure your technology enables you to focus on your core business.

It’s time to look to the future and think about how your core environment aligns with your business priorities. We’re ready to start the discussion when you are – just email me mentioning this blog post and I’ll be glad to talk to you.