APIs & MARKETPLACES The pandemic has demonstrated that a Cloud-based, API-driven insurance ecosystem delivers cost-effective change fast, as Instanda’s Head of Solutions, Gari Gono, explains If the insurance industry needed a compelling reason to finally deal with digitisation, COVID-19 was it. The pandemic has changed the question on its leaders’ lips from ‘if’ to ‘how’ they should modernise. And Cloud-based, software-as-a-service (SaaS), ‘plug-in’ API ecosystem solutions are among the fastest, least-disruptive options they can choose. They only have to look across at the banking sector to see how that approach has played out. The ‘out-of-the-box’ model has take hold there in recent years with transformational results. Incumbents are gradually letting go of their historic predilection for owning their own, on-premise IT infrastructures in favour of platform systems that delight their customers with the kind of seamless
services the big tech players have led them to expect. Cloud-based systems have delivered flexibility to scale (up or down), test and trial, introduce, improve or replace products at the touch of a button. Software-as-a-service is significantly reducing the cost of ownership and freeing up staff to concentrate on adding real value to the organisation. And an API-enabled network is facilitating rich data sharing and a marketplace approach. Like banking, insurance has been hampered by time-consuming manual processes and documentation, compliance and hard-to-update legacy systems, which have held their gaze on technical delivery rather than focus on meeting customers’ needs. But whereas banks wrestle with the dilemma of how to expose their systems in an ‘open’ environment without sacrificing direct customer relationships, the insurance value chain is used to disintermediation. Insurance carriers have been working through agents in various forms for years – intermediaries like brokers and, more recently, managing general agents (MGAs) and price comparison websites. It’s already a complex web
of partnerships. Its immediate challenge is how to balance some of the biggest potential payouts ever demanded of it while experiencing historically low returns from investments. And who’s going to sign off a hugely expensive digital transformation budget against that background? As Instanda’s chief of staff, Steven Haasz, recently said, the requirement for insurers to digitally accelerate couldn’t have come at a worse – or a better – time. “Many insurers have used this [COVID-19] as an opportunity to look again at their strategy, tools, technologies, and how their consumers want to procure their services. They’ve decided they want to become more digital, nimbler, so they can improve their business. But at a time of immense cost pressure, they want to do so without the huge timescales and large sums traditionally associated with transformation. “Partnerships are a solution to that problem. Insurers can partner with organisations like Instanda, where the start-up cost for the platform is considerably smaller than other
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TheInsurtechMagazine | Issue 5
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