Many insurance businesses, from large corporates to SMEs, find themselves faced with the same conundrum: how do I innovate from a legacy system?
As technology continues to transform the business landscape, the insurance industry is often accused of being slow to adapt, and the response from many inside it is that outdated legacy systems are holding it back. But legacy is too often used as an excuse, when in fact, businesses should be innovating on top of the systems that they already have, according to one innovation expert.
While old systems can certainly be challenging to deal with, “what you have to do with legacy is accept that it will always be part of what you do. As soon as you launch a new proposition, and then start thinking about the next thing, that old proposition effectively becomes legacy,” Adam Jones, head of innovation at Altus Consulting, told Insurance Business.
What many insurance firms are not great at doing is building an architecture that accepts that legacy will persist, and understanding that they need to innovate on top of it, Jones explained.
“Businesses need to get to a point where they’re very clear about what they’re aiming for,” he said. “They should have a very clear mandate within the business that articulates that... They need to not be doing things separately, but to innovate on top of the legacy that exists, and use it for customer data management, in a meaningful way.”
One emerging insurtech trend that is actually a throwback to insurance’s roots is the modern iteration of social, or peer-to-peer, insurance. A number of start-ups are using technology to enhance the concept of risk-sharing, which formed the foundation of what we now call insurance.
Friendsurance uses social media to link friends together to buy collective non-life policies from established insurers, reimbursing the group if no-one claims. Similarly, So-Sure Insurance rewards users for connecting with their friends and family on its mobile phone insurance policies, offering up to 80% cashback each year if the reward pot stays intact.
“For me that feels a bit like the origins of insurance,” Jones said of the trend. “In a more connected world, where social media and the various conduits of communication we have allow for more connection, then we can get back to trust.”
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