Driving to ‘Simple’ in Insurance: Agility and Speed through Digital Transformation, Part 2

By creating the right team, evolving to straight-through processing with discrete goals, and mandating microservices, an insurer can create a powerful roadmap for digital transformation.

(Image credit: Cocoparisienne.)

In Part 1 of this series, I introduced the concept of “simple” as it relates to the tough task of digitally transforming your insurance organization. We outlined how to define simple for your organization by inventorying four key areas—and asked you to work with your team to determine exactly what those four areas mean for you.

Having completed that task, you’re ready to look at the process that makes simple happen. It’s a three-step roadmap:

  • Build the Right Team
  • Evolve to Straight-Through Processing
  • Mandate Microservices

Build The Right Team

One of the most common ways transformation initiatives breakdown is through a disconnect between the executive and the rest of the team. This can be prevented through creating small teams, composed of members of equal organizational rank.

Simple, after all, is a multi-disciplinary activity. It’s not just asking your IT team to make a simpler interface or your designer to change a font. What is required is a holistic view that represents a full range of capabilities, including:

  • Business Owner: Seasoned business executive that knows the marketplace, knows how customer preferences work.
  • Product Expert: Actuarial and underwriting expert with rates and rule knowledge.
  • UX Designer: Interface expert who brings design thinking to the process, whether you’re creating a chatbot or a simplified website.
  • Information Architect: IT expert that knows which technologies will guarantee the most rapid and reliable results.

Evolve to Straight-Through Processing

With the team in place, it’s time to get to work—which few have done. Industry research suggests that very few insurers have transferred their new business process to a digital environment, let alone total automation. For insurers that continue to rely on spreadsheets, email, faxes and human intervention for most of their new business activities, the transition to straight-through processing can seem daunting. Progress is more likely to be achieved by those who look at digital simplicity as an evolutionary process with discrete, achievable phases:

  • Automate: Taking things such as the payment process, issuing a policy and all the functions that don’t involve decisions, and migrating them to an automated state.
  • Enrich: Enriching the data and minimizing the amount of data that the customer needs to provide. Data input can be replaced with data callouts from external sources—whether motor vehicle records or probability models from external vendors.
  • Refer: Enacting rules that allow a percentage of business to flow straight through, without underwriter involvement. Insurers can start with a low percentage, then increase over time as the business becomes more comfortable with less and less human intervention.
  • Learn & Decision: The desired end-state of migration—where we use everything we’ve learned to create a 100 percent digital environment where artificial intelligence is making dynamic decisions.

Immediate issuance—in a fully automated state—should be viewed as the Holy Grail. Traditional organizations striving to evolve their business toward simple shouldn’t castigate themselves for falling short but should focus on the next 3-5 years as critical to evolving towards automation. 

Mandate Microservices 

Microservices, for those who may be unfamiliar with the concept, applies simple to the traditional software services model. The term was coined about 15 years ago to describe a new generation of web-based applications that were taking advantage of cloud computing’s distribution capabilities.

Per Martin Fowler, author of Refactoring, noted that microservices differ from other forms of SaaS in terms of their granularity. Whereas the focus of cloud applications is portability and persistent deployment, microservices isolate particular functions. The idea is to refine services into modular units that can be refined and managed across the organization.

For insurance industry stakeholders looking to evolve toward straight-through processing, microservices brings simple to the team-based development model. In place of siloed teams working toward the next commit in GitHub, teams share assets between themselves as well as build new assets. For instance, if one group of developers wants to process a quote, the system they manage talks to another system to get the work done.

Simple is what drives evolution toward such interoperability. It is also what organizations do on an individual level to create microservices that interface with the same ease as the straight-through processing models they are building for consumers.

But First—Adopt the ‘Amazon Mandate’

The approach to straight-through processing is derived from a Jeff Bezos memo from 2002, where he outlines a mandate with five key points, paraphrased below:

  • All teams will henceforth expose their data and functionality through service interfaces
  • Teams must communicate with each other through these interfaces.
  • There will be no other form of inter-process communication allowed: only communication via service interface calls over the network.
  • It doesn’t matter what technology they use.
  • All service interfaces, without exception, must be designed from the group up to be externalizable.

Why does this mandate matter to organizations evolving toward a straight-through processing model? As the underlying infrastructure of simple grows more complex, the ability to reuse assets from different sources in different situations becomes not only advisable but essential.

The next 3-5 years are going to be critical for insurers, with IT investment moving towards the cloud, AI, and other technologies that support a straight-through processing environment. The road to simplicity for the consumer is achievable, even for insurers that still rely heavily on manual processes and human intervention. By creating the right team, evolving to straight-through processing with discrete goals, and mandating microservices, an insurer can create a powerful roadmap for digital transformation.

Driving to ‘Simple’ in Insurance: Agility and Speed through Digital Transformation, Part 1

Raja Singh //

Raja Singh is responsible for Vlocity’s global Insurance & Financial Services business, and also leads its industry cloud technology platform. He’s crafted Vlocity’s digital interaction-focused product strategy, and lead the design of many of its technologies, including OmniScript, Mobile, Cards, DataRaptor and the Vlocity Process Library. He is currently focused on Vlocity’s Digital Insurance offerings, including Personalized Insurance, Digital Quoting, the Agile Middle Office and OmniChannel Service. Singh began his career as banker at Silicon Valley Bank, where he served emerging technology companies in the Bay Area. He transitioned to the enterprise software industry in 1998 as the first Product Manager in the Siebel Financial Services team. He lead that product suite for over eight years and seven major releases as Siebel established the Financial Services CRM software category. He holds a BBA in Finance from the University of Notre Dame, and MBA from Harvard Business School.

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