Graham Elliott, CEO of Azur
The insurance industry is behind the times when it comes to using new technology. A recent report by the Economist Intelligence Unit found that insurers were limited in their digital capabilities because they struggle to integrate new technology into their current systems. In order to put a digital gloss on their operations, many companies in the industry have chosen to invest in front-end products that improve the user experience (UX) – but which don’t address the longstanding back office issues that prevent the insurance industry from really embracing and leveraging the digital revolution.
The industry continues to be held back by legacy systems. The traditional response to this challenge has been to build siloed apps round the outside of core systems that help to tick the boxes and solve immediate problems. It might be a risk register on an Excel spreadsheet, a conflicts of interest register in Word, or an expensive data extraction toolkit to work out if customer outcomes are satisfactory. The problem with this approach is that the real insights are not in the individual data streams but in the connections between the data streams. So, if your expenses system isn’t connected to your underwriting system, how can you monitor the correlation between excessive T&E and inappropriate loss ratios or conversions? An organisation with lots of orphaned pockets of data is not a place that has truly embedded conduct at the heart of its business, nor is it one which can make the most of the capabilities that new technologies can offer.
This is where regtech comes in. If you can find a system that reaches into the depths of the insurance back office and collates all the disparate data streams, the senior management team can actually tell what is happening in real time wherever the firm is trading, rather than waiting for problems to surface and then trying to remedy them. Even better, if you can build a core system of record where all of this stuff sits alongside the underwriting and customer data, then you have an insurance business with a shot at competing in a modern, increasingly real-time world. And if you have made the effort to do this, what better signal can you send to your employees that you have put culture at the heart of your business by embracing good conduct? What gets measured gets done, the old adage says. In insurance, it’s what doesn’t get measured that’s the Achilles heel that could ultimately destroy value for your stakeholders.