June 16, 2022
What: It has been clear for some time now that legacy systems simply cannot provide the tools needed for true digital transformation. In an effort to compete, they’ve tried to bolt on features and hack together solutions for their customers’ digital needs. However, top insurers are transitioning away from legacy systems to engage API-driven architectures.
Why it matters: This is looking like another Blockbuster vs. Netflix moment, where the companies prepared for the new reality excel while the others fall behind. There will be a snowball effect as well, as the insurers who have the tech in place will continue to expand their advantage while the rest of the market tries to catch up.
Read: Why an API architecture accelerates digital transformation
What: Insurance has historically been a slow-moving and slow-changing industry. However, the dramatic developments of the past few years have created a unique environment that has fostered and even compelled innovation. AI, automation, and new business models based on open insurance and partnerships have combined to provide a unique environment that is fostering evolution for the industry.
Why it matters: Insurance is admittedly a bit of a technical laggard when it comes to digital innovation, which means we can analyze the history of other industries to identify trend indicators. In almost every example, from media to financial services, we see the same thing: failure to adopt can absolutely kill a company.
What: The property and casualty insurance sector recorded profits in 2021. While likely to perform even better in 2022, there are major hurdles in the mid- to long-term through which the industry will need to suffer. As we’ve seen in the personal lines sector, inflationary trends and the growing regularity of natural catastrophes are likely to cause market hardening and lowering loss ratios.
Why it matters: Preparing well for these upcoming threats will be key – updating insurance products now will help carriers avoid having to employ draconian measures later.
Read: P/C Insurers Positioned for Underwriting Improvement, But Longer-Term Challenges Await
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