Articles - No inflation for innovation

The move into digital finance is driving a big leap in innovation across the life and pensions industry globally. Creating new products and digital services suitable for the online world is key to being able to compete. The millennial and GenZ generations have high expectations of their needs being met and Insurers must have the ability to respond to this demand by creating new services and products in very short time-frames.

 By Tom Murray, Head of Product Strategy for LifePlus Solutions at Majesco.

 In order to have this capability, insurers need to drive their services from cloud-native platforms. These platforms have been designed with the ability to launch and service products on multiple digital channels, thereby empowering the customer to choose how they wish to interact with the company. Customers expect content-rich services and to provide these, insurers need the ability to leverage services from other providers to provide appropriate, complex customer experiences that allow consumers to receive recommendations and get information in real-time to inform their decisions.

 In days gone by, moving to a new platform meant a complex, high risk multi-year project. It would dominate the focus of the company and require a huge budget. It would also require the company to commit to a strategic plan across those years that would make it difficult to react to new events in the market; like an oil tanker’s path, once the company’s strategic course was set, they would find it almost impossible to change it.

 Whilst the cost of doing business is rising rapidly in most sectors, the cost of digital innovation is going in the opposite direction, The digital revolution has not only changed the consumer market, it has also revolutionised the software solution market. The rapid increase in the provision of Software as a Service has led to a new approach to projects, where companies can start using software rapidly on a “try it and see” basis.

 Digital innovation has led to a huge increase in a pay-per-use approach for consumers and SaaS brings the model to the business world. No longer do insurers have to pay a large, upfront license fee and annual license fees, along with ongoing maintenance fees. Instead they can subscribe to use a platform and launch products and services for a monthly fee, paying for just the number of users they want and increasing their subscription levels as needed as the number of products and services or users grow. This monthly fee includes all licences and maintenance costs enabling the insurer to budget for the future.

 Having a low cost barrier to entry means that an insurer can innovate without a huge commitment of time and cost. Without the huge upfront cost, innovation becomes relatively low-risk for insurers and allows experimentation without having to justify the approach through detailed business cases. Digital platforms let them to try new ideas rather than having to spend an enormous effort proving them first. They open the gateway to rapid innovation that the effort of changing legacy systems and processes had previously made impossible.

 Insurers need solutions that empower innovation in the life and pensions world by allowing insurers to start with single products and increase their use of the system based on their results. They need to be able to swiftly respond to changes in the market place, keep pace with innovations from their competitors and launch their own new products and services with a speed to market that was previously unimaginable.

 With a low-entry cost, SaaS solutions enable insurers to break free of their traditional monolithic approach and respond rapidly and in multiple ways to the market. It enables them to try out new approaches and learn from the results to fine-tune their approach to the market. It gives insurers the ability to innovate constantly without requiring the massive budget commitment that was the hallmark of research and development projects in days gone by, thus reducing the risk for the company.

 The future lies in businesses being able to rapidly respond to customer demand and to the changes that improving technology enables. Constant innovation will be the launchpad for success in an era of customer-centric, individualised digital solutions. Insurers that don’t adapt will be left behind. Thankfully, the right option is now also the cost-effective one.

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