The core technology in life insurance is often referred to as the core platform. The core platform has become the backbone of all life insurers across the world. The reason is, life insurance products are long-term in nature, there are various products that are to be created and maintained to meet the needs of various life stages of a customer, and to do that, the core platform is the silent executor. It ensures that all financial promises that are made by the insurer are met if the products are set-up and maintained properly.
Even today, the core platform gets the maximum attention in the life insurance technology world. Does this deserve this much attention, is the platform meeting the needs of the evolving market? If you ask this question to the life insurers across the globe, the answer will be mixed, but within the next decade or so, in my view, the core system will be just a repository of data, before losing its relevance.
The other point is why it will take a decade or more to lose its relevance. The answer to this, may not be a technology answer, rather a financial one, the cost of operating the older policies than to migrate this to the new world. Also, another point to ponder is what is leading the change of core losing its relevance and why it will lose its relevance. First and foremost is all the life insurance companies have built systems around core platforms to provide a better experience to the customers.
What core platforms are not flexible are being built with various other applications and technologies. The good part is, instead of quipping, ‘Who moved my cheese’, the core platform owners themselves have created various experience/process skins and making them available to the life insurance company. To add this, the core platform owners are creating microservices and connectors for handling data, the embedded logic that is needed with distributed databases. So, the answer is what is going to replace the core platform is none other than microservices.
Each insurer is planning or in the roadmap of creating or adopting various microservices that are needed for each of the business capabilities that are needed or maybe for a product. It is not something that will happen overnight, as the transition will take time.
The other question is that why an insurer is moving towards microservices, what are all the things that are stacking up against the core platform. The clear factors are –
Microservices gives the flexibility in the ways to distribute a product
Time to market is expected to come down once the microservices are in place and
Maintenance is going to be relatively better than the core system, as the cost of finding and managing a resource who knows the technology and it is architecture will become costlier by the day.
One aspect, which is not clear is, whether there will be savings in terms of moving to a microservices architecture vis-à-vis when compared to legacy is anybody’s guess. In my view coupling, microservices with analytics will be the next normal for any life insurance company.
Source: Economic Times
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