Disruption in the Life and Annuities (L&A) insurance industry has been brewing for some time now, and the COVID-19 crisis has added more fuel to the fire. L&A insurance carriers are facing a host of challenges, including a demand slump, profitability pressures, complex regulatory compliance mandates, and an uncertain macroeconomic environment. At the same time, consumers want more direct channels and are demanding digital experiences and products.
L&A insurers’ ability to satisfy their customers’ emerging and evolving needs has been hampered by a plethora of antiquated core systems built on old technologies. Now, carriers are actively looking to jettison this legacy burden by adopting core, cloud-based platform software solutions that have an open architecture and are readily configurable to deliver modern policyholder experiences. Indeed, they are viewing core system modernization as a strategic mandate to enable digital transformation and drive digitalization across the insurance value chain to offer new experiences and improve service quality. They recognize that taking a cloud-based platform approach to modernization will drive improved operational efficiency, agility, scalability, accelerated business value realization, and better front-to-back customer experiences. They also understand that implementing a platform-first operating model will ensure their business operations are more resilient to future challenges and black swan events such as COVID-19.
The technology vendors’ changing value proposition
Technology vendors are responding to L&A carriers’ new requirements by building digital platform capabilities across the insurance value chain and evolving from being just pure-play product vendors to being SaaS players, with a growing portion of their revenues coming from subscription and support services. They are investing heavily in platform solutions with a high degree of cloud-readiness to enable rapid time-to-value for insurance carriers. They are focusing on building modularized platform solutions with a modern technology architecture that are API-driven and microservices-enabled. Enabling business-friendly, codeless configuration while supporting extensive out-of-the-box functionality is also a key vendor priority. That is because it will help carriers reduce platform implementation costs and time, seamlessly make platform enhancements and upgrades, and effortlessly integrate with other B2B partners to harness the immense potential of the insurance innovation ecosystem.
The partner ecosystem
As the market evolves and expands, there is a greater need to rethink partner strategy to succeed. The right set of partners can greatly enhance the value proposition of any core platform for a carrier. As a result, L&A core platform technology vendors are strategically focusing on expanding their partner network with InsurTechs, implementation and SI partners, and other third parties to create more opportunities for innovation for carriers. Having a multitude of options to seamlessly plug-and-play different kinds of offerings – such as unstructured data sources, analytics applications, and automated claims management portals – is a win-win situation for all the parties involved. Thus, bringing in different pre-built solutions from multiple partners, bundling of offerings from InsurTechs, and the depth of integration expertise of technology and system integration partners, are becoming quintessential to beat the competition, enable sustained growth, and drive differentiation for the core platform technology vendors. Having a sound partnership strategy allows carriers the flexibility to individually pick and choose added functionality from the ecosystem that they want on top of the core.
Core platform systems are the foundation on which insurance carriers run their business. L&A insurers are increasingly recognizing that to compete in the age of digital insurance, they need a cloud business platform with modern, data-driven capabilities that enables rapid product innovation and delivers speed to implementation, speed to market, and speed to revenue. With customer experience becoming a game-changer for the industry, the need for carriers to drive a modernized core is becoming paramount to drive growth and differentiation in a post-vaccine world. This provides core platform vendors a tremendous opportunity to support insurers on their core modernization journey by providing innovative platform solutions to create digital-first stakeholder experiences and drive strategic impact on insurers’ businesses.
To learn more about the ongoing trends in the L&A insurance core platforms market, please read our recently published report, Life & Annuities (L&A) Insurance Core Platform Software Adoption Trends – Unlocking Efficiency and Growth for L&A Insurers. Or, you can reach out to [email protected], [email protected], or [email protected] to talk in more detail about the trends.
Everest Group is also conducting a market study of leading policy administration platforms in the L&A insurance industry. This is the inaugural edition of this study, and we are excited to invite all the leading platform vendors to participate in our research. Please see the invitation here. You can also contact [email protected], [email protected], or [email protected] to learn more about the participation process.