Key Topic: Modernization of the Application Landscape

IT ARCHITECTURE OF INSURANCE COMPANIES – MAJOR NEED FOR MODERNIZATION

Fast response times, the latest technologies and a high degree of flexibility – these are the demands that companies must meet in the digital age.

“As the markets and society move ever faster, many companies lack the required agility”, explains Gerhard Weigand, Manager at Q_PERIOR. There are several reasons for this: rigid and partially obsolete IT systems with high maintenance costs which are still at work in most companies, and a lack of clarity and transparency regarding corporate structures and data. Many companies and their IT architecture have expanded over decades. Large silo solutions were created, while no attention was paid to combining individual applications and data. It is often no longer possible to obtain an integrated view of a large company and its customers. The result is that new market requirements and customer demands can only be implemented with a great deal of effort.

This situation is compounded by steadily growing regulatory demands placed on companies which tie up a lot of resources, leaving little room or time for innovations and their implementation. Strategically, technically and in terms of their processes, many companies therefore have a large pent-up demand for a flexible IT system which offers them opportunities to define up-to-date customer interfaces. “And the upheavals are already in full swing”, Weigand reports. Customers’ behavior and needs are changing radically in the course of digital transformation. Customers now expect self-service opportunities, 24/7 availability and functional, individual offers.”

Strategic goal: modernization of application landscape

Companies must face up to the challenges of the two-speed development of solutions (bimodal IT) if they do not want to be left behind by market developments. Modernizing an application landscape characterized by modularity, flexibility and networked capability is an imperative. The goal is to update the IT architecture and adapt it to new customer interfaces in such a way that it can keep pace with the speed at which the market and society are evolving.

Proactive modernization

When it comes to putting this goal into practice, companies can achieve specific, tangible change by taking a closer look at their technical processes and the applications they use. This affects all processes from the initiation of new business to the maintenance and termination of contracts. The various technical processes are mirrored on the IT side by applications such as special sales or claims systems. In many companies, these processes and their associated applications have grown over a period of decades, and have been expanded and changed with the result that the overall picture has often been lost due to the complexity and specialization involved.

In order to regain a good overview of the entire application landscape and to analyze the processes and applications in more detail, companies can fall back on external consultants and their analytical models. For example, Q_PERIOR has developed its Q_PERIOR Insurance Model for customers from the insurance industry. This kind of model allows an integrated view of the processes run by insurance companies, including models of the application architecture. This makes it possible to trace the manner in which processes and applications are interlinked.

In detail, the Insurance Model actually comprises three models: core technical processes, technical architecture and application architecture. In the analysis, these act like a project catalyst as a common basis for communication between customer and service provider. The detailed perspective usually illustrates that the IT architecture from one insurance company to the next has evolved historically and is highly individual.

Analyses conducted with the aid of the Insurance Model drill down deep and are comprehensive. If companies initially would like to obtain a first impression and rough overview of their internal situation, a “Quick Check” is the more suitable tool. In a Quick Check, the primary focus is only on examining and mapping the company processes. Therefore, this model is well suited to minor modifications and a quick analysis of their potential effect. However, a more comprehensive analysis is inescapable in order to obtain an integrated perspective and to derive fundamental changes from it.

Modernization with focus on corporate strategy

The results of the analyses give rise to corresponding recommendations for action and measures to be implemented: the substance of such recommendations and measures is different and specific to each insurance company. This is due to the fact that the changes must be reconcilable with the respective corporate and product strategies. These measures range from revising the product or customer portfolio, changing customer assessments to clustering and the selection of individual applications which have to be changed.

“The way in which companies implement analytical results, however, depends not only on their compatibility with the company’s focus but also heavily on its willingness to make changes”, as Gerhard Weigand emphasizes.

Readiness to modernize increasing

Large insurance groups, in particular, often recoiled from more extensive modernization initiatives in the past due to the personnel and financial resources required to implement them. This tended to reinforce the problem of an almost rampant, obsolete process and application landscape. Many, however, are reaching the limits of their capabilities, particularly with regard to the numerous special solutions which slow down the systems appreciably. For that reason, the readiness for change is now growing. Not least due to the continuously increasing regulatory demands which they are facing. Many national and international regulations have been issued in the past for insurance companies such as Solvency II, IDD and IFSR 4. Companies were heavily involved in designing and implementing them. For lack of time, they often fell back on quick emergency or special solutions. Over the years, this led to a whole potpourri of provisional solutions. Many insurance companies cannot and are not prepared to continue in this fashion, and they are now striving to achieve a conversion to a modern, flexible IT architecture.

Regardless of whether they are small or large insurance providers, all of them will have to come to terms with the modernization of their application landscape in the near future. The constantly changing behavior of insurance customers, their increasingly individual insurance needs and burgeoning regulatory requirements leave them little scope for maneuver.

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2017-05-09T18:05:28+00:00 9. August 2016|