Like the financial services industry, the insurance industry is lagging behind the curve when it comes to the “modernization” of their technological platforms. This primarily rings true with core system vendors that have large customer bases on legacy platforms that manage a sizable portion of the day-to-day operations. The cost and risk associated with updating these solutions is significant for both the vendor and the customer. For the last few decades, core system vendors have leveraged older, on-premise solutions as their foundation. With the emergence of “the cloud,” many simply migrated what is still an on-premise solution to a cloud hosted environment, labelling it as “software-as-a-service” and selling it as a subscription package. Few have led with a cloud-native solution, that is purpose built for the 21st century.
Why this matters is that many of the current solutions on the market are not built for today’s technology landscape. In the times of multi-tenant, micro-serviced, open-architecture platforms that have easy-to-use API’s and an ETL for data import and export, these older solutions create a significant lift for vendor partners to integrate 3rd party solutions. Even worse, once these integrations have been established, they become high-risk branches of code for future product releases. Without the necessary backend architecture, your IT teams will be forced to manage updates and ensure standard releases don’t bring down critical processes across the business. Which is why it is crucial for insurance companies to understand their core system vendor’s technological abilities to integrate with other vendors.
The next time you evaluate core platforms for your business, ask how your vendor manages integrations, whether they have an open set of APIs, and what existing integration points they have for other customers. It is important to understand the foundational structure of your next vendor since your core system is the bed rock of your entire insurance operations.