Chapter:
Introduction
4
Figure 2: Q: "Select the relative impact of the following common barriers to successful digital
transformation." (n=74)
Source: Celent
These various forces mandate that, going forward, insurance business and automation
architectures are:
• Increasingly open.
• Characterized by a greater reliance on multiple third parties. Solutions will move
away from "best-of-breed technologies" toward "best-of-breed suppliers" (services +
data).
• Using external assets such as cloud.
• Bought increasingly through subscription contracts; there will be a decrease in direct
ownership of insurer IT assets.
• Using more data.
• Increasing the amount of unstructured data (voice, image, prose, etc.).
• More secure; Regulators will insist on increased data security, privacy, and control;
actions to increase the transparency of interactions with consumers will be
mandated.
An important step to transition to this environment is the rearchitecture of insurance
information infrastructure. This means the use of application programming interfaces
(APIs), construction of microservices, transition of systems to the cloud, use of agile
techniques for development, and processes which design solutions around the customer.
(For more information on how these various efforts support digitization, see the Celent
report The New Recipe That Is Changing Insurance.)
Among these options, APIs play a central role.
1
But what benefits should insurers look for
from the technology? What risks should be managed? How can they be mitigated? This
1
This report assumes a familiarity with API technology. For more on the technology itself, see the Celent report
The New Architecture for Core Systems.
18%
16%
40%
14%
18%
22%
38%
35%
41%
21%
47%
49%
58%
49%
47%
43%
40%
39%
34%
20%
14%
0% 20% 40% 60% 80% 100%
Existing legacy IT systems
Company inertia
("We've always done it this way")
Lack of top level leadership
Lack of proper skill sets
Day to day business / necessity of short
term returns crowds out investment…
Inadequate Com munication
Inadequate reward systems
Not significant barrier Somewhat significant Significant barrier
