Insurance Technology Options: Single Vendor or Best in Breed?
The Internet has changed many things over the last few decades, not the least of which is customer expectations.
Loads of free content, a dizzying array of options, highly-efficient comparison aggregators and instantaneous, anonymous results have, shall we say, raised the bar. Customers of every industry want a lot, and they want it now.
With goods and services providers across the board feeling the pressure to respond, insurers are no exception. Strategy Meets Action observed that 78 percent of P&C insurers are either working on modernizing their core systems, or else they’ve already done so. Their ability to offer customers more and better options for product customization hinges on those core systems: policy admin, billing, claims. The machine must remain well-oiled.
Of those insurers who are busy replacing and consolidating their core systems, more than half are working on all three at once. That’s a remarkably vast, complex task. Not surprisingly, they’ve got their ears pricked for a solution that can do it all.
Single vendor or best of breed?
In a recent webinar, Insurance Networking News (INN) compared an end-to-end policy administration solution adopted by Oregon Mutual to a mixed, matched, best-of-breed strategy adopted by Great American.
Both insurers “agreed that undertaking a core systems transformation is no longer optional for most insurers,” INN said. “Driven by the high cost of maintenance and competitive pressures, companies have no choice but to adopt more integrated and flexible technology that will allow them to respond much more quickly to the marketplace.”
But which insurance technology approach to take? The best-of-breed approach sells itself on adaptability in the face of diverse product lines. A single-vendor suite offers ease of integration, unified data modules and the flexibility and scalability that come with them.
Third option: try a bit of both
“A third approach referred to by Gartner Group as ‘single vendor best of breed,’ was described by Philippe Lafreniere a senior vice president at EIS Group, the webinar’s sponsor,” said INN.
By relying on a single vendor to provide integrated suites, an insurer can reduce complexity and compatibility issues while supporting multiple lines and distribution channels at the same time. Even better, it allows the business to scale at its own pace.
For most insurers, the need to replace and consolidate core insurance software systems is not in question. Market research by Celent revealed that overall, insurers are spending well over half of their IT budget (about 60 percent) on maintenance. The insurance technology we use must keep pace with the demands we’re facing.
The real question is the how. Whichever approach you take in your modernization efforts, we invite you to remember that at the end of the day, an insurer’s greatest asset is its agility. Insurance technology is changing fast; you don’t want to discover that your revamp has become obsolete just as it’s become complete.
Ask me how Silvervine’s insurance software can amp your company’s agility.