As a business professor of mine used to say, “do what you do best and outsource the rest.” Insurance companies that are experiencing the weight of digital transformation can learn something from this mantra. By understanding what your core competencies are as a business – providing world class service to your members, offering competitive rates to attract new customers, or maximizing your contributions by streamlining process to reduce loss ratios – you can focus your energy and partner with vendors that deliver complimentary services to facilitate additional objectives of your organization. The businesses that have followed this mantra have led the industry shift from trying to build their own core platform solutions, to leveraging SaaS (Software-as-a-Service) vendors that continuously manage a suite of products for insurers to operate their business from.
For any insurer, having a fully integrated policy and claims solution is a must-have. Vendors in the core platform software industry have rallied around this idea, releasing solutions that provide a seamless transference of data across their suite of solutions. There is immense value in having a comprehensive solution that offers the functionality to operate your insurance programs end-to-end. It helps solve the complexities of industry reporting and provides internal analysts a single source of program data that can be leveraged for dashboarding and predictive analytics.
Just as insurers are turning away from homegrown solutions and embracing SaaS vendors for their core operational platform, core vendors have realized they can’t (and shouldn’t) provide all the ancillary functionality that is required to effectively operate an insurance program. Instead, they are setting up integration partnerships from 3rd party vendors that have cracked the code on those nuanced areas of the business – “do what you do best and outsource the rest.” This enables core system vendors to focus on their own core competencies and leverage the expertise of other technologists that are dedicated to delivering value in these ancillary areas of the business.
By understanding this trend and the progression of insurance technology, insurance leaders will be able to future proof their businesses by making strategic investments into critical IT infrastructure. Throughout this article, we will help unpack the value of integrations and why insurance companies should embrace a multi-threaded approach to their technology stack.
The Value of Vendor Partners
The velocity of technological development has increased exponentially over the last two decades. For the insurance industry in particular, this acceleration has created a competitive rift between the early adopters of true SaaS technologies and businesses that held onto homegrown or on-premise solutions. Early adopters have reaped the rewards of an open software architecture that enables their business to have the flexibility to tie in with ancillary solution providers that bolster their strategic initiatives for growth and program efficiency. We see this broken down into three key value propositions:
- Their Business is Your Business – The sole purpose of these organizations is to deliver value back to your business. Their portfolio of partners are other insurance programs that are looking to solve similar challenges – a rising tide raises all ships. Vendor partners are incentivized to create innovative solutions due to the competitive nature of their industry. As an insurer, this means you can outsource these responsibilities and focus on your core operations
- Excellence and Expertise – The insurance landscape is forever changing as new rules, regulations, and considerations are constantly rolled out. As an insurer, a core pillar of your business is compliance and adherence to these changes. A vendor partner has the expertise to help you navigate and implement these new rules across the organization. Every vendor should be an expert in their respective field and will be able to provide consultative feedback that helps deliver additional value to your customers.
- New Services are Emerging – A basic tenet of innovation is that innovation begets innovation. By shifting your technology strategy to include multiple vendor partners to help streamline the operations of your teams, you reap the benefits of their future innovation. Instead of having to curate your own strategy and allocate the necessary resources to do so, your program will be able to rapidly roll out new processes and incorporate these new services.