Scott Field, Head of International Product at Duck Creek Technologies, explores the “new standard” insurers are looking for when it comes to delivering for their customers. 

What are the main issues that large insurers face when tackling legacy systems, and why do they impact insurers’ bottom lines?

I think the main issue is the complexity of the business of insurance, and the struggle of deploying old technology in order to put new ideas into play quickly, meeting complexity with more complexity.

Over a decade ago when I worked with pricing insurance, the algorithms and underwriting rules were spiralling in their complexity. In fact, the UK has a great phrase to describe the effect it had: “over-egging the pudding.” We had millions of ways to get to a premium of 800 dollars a year. These systems grew from the idea that insurance must be complex to be accurate.  

But ultimately, complex systems build in delays that ultimately drag on insurers’ ability to innovate, and lead to higher costs and lower efficiency. 

My time spent at two leading core providers has highlighted the need for insurers to start any transformation with these questions at the heart of the project. The ones that don’t invariably get hit with enormous, unexpected costs. When they drill down to where the costs escalated, the answer is inevitably because they replicated complexity in a modern coding language. 

This approach drives what we call technical debt, and it’s a liability many insurers struggle to properly quantify. 

Now, more and more insurance leaders are aware that having bespoke, heavily customised, highly complex enterprise technology is not only expensive and inefficient to maintain, it’s also completely unnecessary.  

Change is in the air and insurers are looking to replace older systems; we are seeing a cultural shift that is forcing decision makers to ask themselves: “How much complexity do I really need? What is the value added with that incremental underwriting rule and rating table?” 

The best insurers are asking themselves:  

• How do I simplify my enterprise architecture?  
• How do I simplify my underwriting process?  
• How do I become easier to deal with from a customer perspective and use modern technology in the way it was designed, rather than replicate all of the functionality I had previously in some modern cloud platform? 

Ultimately, it’s about insurers shaping their own futures, not having their strategic limits dictated by the technologies they use.

More and more insurance leaders are aware that having bespoke, heavily customised, highly complex enterprise technology is not only expensive and inefficient to maintain, it’s also completely unnecessary.

What is the most challenging aspect of introducing a new insurance product enterprise-wide?

A recent global survey of insurance professionals provided quite an illuminating answer to this very question! Over 40% of respondents1 said that creating the systems to deploy products was the most challenging aspect of introducing new products across a business.  

I think this is a pretty stark statistic, and really holds a mirror up to the fact that using out-of-date technology is genuinely holding insurers back. After all, I think the technical side of it is well done now, in terms of the actuaries doing the market research and creating the actual product structure.  

To quote from that independent survey again, over 60% of all respondents said it took either six months to a year – or over a year – to design, test, and deploy a new insurance product! I think that one speaks for itself too.  

When it comes to legacy platforms, one reason implementation speed is so much slower is because of the amount of testing that’s required. The systems can be fragmented; you have a separate UI layer, a separate core layer, and separate data warehouse. 

Whereas, on the modern side, and particularly with the cloud-based SaaS models that are setting the standard now, there is far less complexity to wade through. This ultimately frees up those innovation teams to focus much more on marketing and distributing a new product rather than actually implementing it on their systems. 

What do you mean by the “new standard” in insurance – what does it look like?

The new standard is a way of focussing insurers’ minds on the art of the possible. “What do you want to accomplish, and how can technology help you achieve that?” We’re talking about developing products more efficiently. It shouldn’t be years and years in the making. You should be much more agile in production and strategy. 

It is about technology enabling the strategies of insurers rather than dictating them, and giving insurers the ability to plug into the entire insurtech ecosystem for solutions and partners. It’s coming together with evergreen technology that allows insurance companies to say, “OK, let’s not worry about implementing a quote function anymore – we’ve got that, and it’s future-ready.” 

I think this is the crux of the new standard – giving insurers the trust and confidence that their technology backbone is strong and designed to be future-ready – taking the onus of upgrading and maintaining these systems off of their in-house teams, and freeing them up for more value-add activities.  

This, in turn, allows insurers to upskill, and to focus on bringing together the departments of design, data, and technology in partnership to create better customer experiences. It also allows insurers to focus on their true differentiators, moving in a more agile way to deploy more relevant products and services quickly and in line with evolving customer demands.

What does the term “evergreen technology” mean?

It is the idea that the technology an insurer deploys stays alive and grows all year round, as opposed to going stale and becoming out of date almost as soon as it’s implemented.  

Once an insurer has moved its systems to the cloud SaaS model, they don’t have to think about reimplementing again. Duck Creek’s CEO, Mike Jackowski, uses a great analogy of a car versus a garden; people used to think of enterprise software as a car that you need to maintain regularly (change the oil, etc.) but know that it is ultimately going to wear out.  

Now, with the cloud, it’s a garden: as long as you put in reasonable effort and have a passion for the possible, you can grow whatever you like – and it will last for a long time and actually become more beautiful as it grows. And in this analogy, for beauty I read value! 

The new standard is a way of focussing insurers’ minds on the art of the possible. ‘What do you want to accomplish, and how can technology help you achieve that?

How does this tie in with customer expectations?

Evergreen core systems allow insurers to spend time focussing on customer experiences. Customer experiences in insurance are still rather too slow and can be frustrating, but many insurers are moving away from the status quo of slow product development and limited ability to deliver – and moving towards evolving customer-centric experiences.  

It’s a challenge that I’ve been really pleased to see insurers tackle head-on – they know they need to put customers first, they want to do this, and now the technology exists to truly empower them.  

We’re seeing more and more leading insurers embracing the principles that define the new standard, and learning from those around them who are leading the way in delivering excellent customer experiences. By this I mean offering innovative, market-relevant products to meet emerging demand, as well as offering data-driven personalisation for customers that tailors their experiences and uses data to make insurers’ operations more efficient.  

I buy insurance myself, of course, and as a consumer, I expect insurers to know certain information about me – I don’t expect to have to fill in the same form three times, for instance. I expect a more intuitive customer experience, on my desktop or my mobile.  

It’s possible to get to that level without sacrificing underwriting or pricing integrity. And the best insurers know that it’s about working with their technology providers to ensure that data is leveraged appropriately, and that that data is highly accurate and targeted.  

If we stop reimplementing core systems, it allows us as an industry to focus on this data to give insurers more intelligence, in turn opening up the door to offering customers more streamlined experiences. 

Does a platform ecosystem help insurers stay future-ready?

I have been really excited to see the amount of entrepreneurship going on in the insurance technology sector in the last few years. I think there are going to be more smart people who really appreciate where the pain points are peeling away from insurance companies, raising some money and starting their own businesses, essentially becoming part of the technology ecosystem.  

Duck Creek itself is part of that ecosystem, as a platform ecosystem provider. This means we work with leading solution providers, insurtech partners, and systems integrators to provide insurers the solutions they need to get to market quickly.  

In practice, this means we have a whole team of people scanning the horizon to add the best, most useful insurtechs, solving challenges for insurers and their customers, to our open and growing ecosystem. This benefits both the insurers, by allowing them to plug in to the best new technologies available, and the insurtechs, by allowing them to scale and reach their target market quickly through the Duck Creek Platform and our partner ecosystem.  

We think it’s a really neat solution, expanding the value of Duck Creek’s core system technology, that enables insurers to best execute their unique market strategies and ultimately deliver more for their producers and policyholders. 

The power of the platform and the power of the ecosystem is really just using modern technology to enable people to move faster – instead of spending more just to stand still.

Scott Field is Head of International Product at Duck Creek Technologies