Last month, we announced the winners of the 2023 Datos Insights Insurance Technology Impact Awards. This month, I’m writing a blog series examining industry trends as seen through the lens of the 2023 Impact Awards’ 65 case studies, which catalogue technology projects that real insurers delivered to create real business success. Today, I’ll be diving into trends that surfaced this year in core projects across the industry.
Core projects involve systems that perform the key functions that allow insurers to run their business—policy administration, billing, claims, and underwriting systems (with or without external rating engines) are all included. These projects enable strategic capabilities that allow insurers to achieve their long-term goals, and they tend to be both high-cost and high-risk, with timelines that can span years. Core projects can impact almost every process or transaction an insurer needs to sell and service policies.
Core efforts also tend to be diverse, including not only transformations and migrations but also greenfield efforts that enable new products, business lines, or territories. As such, core projects don’t lend themselves to a single overarching trend. But there are a few key takeaways that characterize the 2023 Impact Award core projects:
1. Core systems are fueling product growth
This year’s case studies include both established insurers undertaking core systems deployments to support new product lines as well as startup insurers and brokers with de novo company launches. These types of projects tend to fare pretty well because their impact is obvious—insurers go from selling nothing to generating millions in revenue. But this growth is underpinned by core modernization, creating greater speed to market. Ease of making product changes is also a factor here: Modern core systems product models make it easier to tweak or iterate on existing products, allowing insurers greater flexibility as they try to capture the market.
2. Underwriting is a priority
Perhaps unsurprisingly, given the focus on implementing core systems projects to support new lines of business and new companies, underwriting and rating these products are also clear priorities. These underwriting projects also touch data capabilities (so that systems have the information and algorithms they need to accurately rate policies) and digital capabilities, since these efforts are often focused on providing faster and more responsive service to distribution partners. Large property/casualty winner West Bend Mutual Insurance’s project to modernize new business submission falls into this category.
3. Cloud is key
A majority of this year’s core projects (13 of 22) were implemented in cloud environments, aligning with a broader trend of insurers embracing cloud. As recently as five years ago, cloud core system deployments were viewed skeptically; today, the situation has reversed—cloud is the presumptive environment unless an insurer has a clear reason to favor an on-premise deployment.
A final shout-out is owed to our life category winner, AAA Life Insurance Company, whose win comes from automating a policy conversion process to migrate large sets of legacy polices as part of a larger transformation effort. This is an area that’s not often discussed but is a persistent issue for life insurers struggling to modernize their environments. (Property/casualty insurers, by contrast, more typically roll business onto their new platforms during renewal.)
To check out all 22 core case studies, read Insurance Technology Impact Awards Case Study Compendium 2023: Core Initiatives. Interested to see what’s happening in the world of data, digital, and IT practices? Find information about all of this year’s Insurance Impact Awards winners here.
