Insurance organizations rely on many different technology systems to issue policies, store customer data, manage financials, process claims and more. Policy administration systems are at the core of all insurance company processing activities and support the very important task of issuing and managing the insurance policy transactions and documents. These systems also support a myriad of activities and capabilities such as point of sale functionality, underwriting activities, user workflow, reporting and analysis.
As a whole, technology has come a long way. However, many of the policy administration systems available today are built on an outdated monolithic style architecture which tightly couples different functions of the software into one system. This might sound beneficial, but the implications of this type of architecture boils down to costly and time-consuming maintenance, restricted business processes, and limits a company’s ability to be innovative and nimble. This is where insurance microservices come into play.
In this blog post, we define microservices, explain it's benefits for insurance organizations, and list keys things to keep in mind when moving away from monolithic systems towards microservices architecture.
Much of the conversation at Insuretech Connect 2018 centered around microservices and APIs. We at Solartis were proud to be Title Sponsors and hosted a workshop covering how insurers benefit from using a microservice based architecture for policy administration. Check out our video clip below for a quick summary around the topic of decomposing monolithic systems using microservices:
Find New Areas of Opportunity
Core insurance systems that are built on a monolithic style architecture limits the ability for a carrier to extend its reach into third party systems and technology platforms, system performance and speed are inhibited, and onboarding and managing new insurance products is burdensome, expensive and time-consuming.
Today, companies are looking to expand into new approaches to selling their insurance products by applying IoT data to behaviorally-priced insurance products, interfacing with technologies like artificial intelligence and blockchain. They are also expanding into new ways to reach and interact with their buyers through technologies like SMS, Chatbots, Apps and voice services.
Similar to other business segments, insurance companies are now looking to decompose their monolithic platforms and migrate to a microservice based architecture. Microservices intelligently defines and separates each function of an enterprise application into discrete services so that each is managed and subscribed individually providing speed to market, improved performance and unlimited flexibility.
Select Specific Microservices for Development
In the video clip above, Nick Richardson, Solartis President & CEO, introduces the concept of change management for insurance organizations undergoing digital transformation. One of the biggest challenges associated with changing your technology is adjusting the mindset of the people using said technology. Overhauling a policy administration system right out of the gate can introduce systemic organizational and operational obstacles. Employees’ day-to-day job responsibilities and activities can change as policy quoting, underwriting, report generation can all fundamentally change.
Nick suggested isolating an area of opportunity, like revamping document generation functionality and using it as a trial implementation for microservices. Although insurers stand to gain a lot from transitioning away from outdated software architecture, resistance to change and organizational complications should not be neglected. Typically, when Solartis works with established insurers, the partnership begins their microservice journey by implementing a new/greenfield insurance product. Using a new product proves out the microservice concept to obtain wider acceptance in the organization before tackling the core insurance product lines.
Benefits of Microservices
The benefits of microservices are numerous. One of the main value propositions of this approach is the creative business initiatives it supports. Building customer-facing cloud-based portals, extending into third party platforms, issuing usage-based insurance products, leveraging data from IoT devices, and more creates completely new revenue streams for insurers and helps them differentiate themselves from the competition. Microservices also support rapid product launches as seen by the Solartis partnership with Starr Companies whose CIO, Mike Toran, is featured in the video above.
Some of the benefits of microservices:
- Operational flexibility and creativity
- Custom / Improved Customer UX
- Supports usage-based products and modern technology
- Improved application performance
- Increased speed-to-market
For more information regarding how modern policy administration systems are reshaping insurance, read this Solartis microservices blog post.
Go Big by Starting Small
To get started with microservices, isolate an area of opportunity and implement the software architecture to address that specific opportunity. This could be launching a new greenfield product, building a new document generation application, or relying more heavily on digital ISO ERC content for one of your products. Use this first implementation as a trial run and monitor how your team adopts new processes and adjusts to a microservices model, specifically members of your IT department. Leverage what you’ve learned from the trail run and extend microservices to other products, processes, and opportunities as they arise.