Market Drivers - Insurance Software Development Market
There are three main market drivers surrounding insurance software market development. These include the need for speed, flexibility, and scalability that comes from moving to the cloud and the desire for secure yet transparent ways to use data provided by blockchain technology. Finally, the need to improve customer service will require new software development.
- One of the three primary drivers for the insurance software development industry is for developers to create new or transition existing solutions to the cloud. The number of US insurer companies with claims systems in the cloud has risen from 13 percent in 2016 to 26 percent in 2018.
- The reason for this movement in the insurance field is twofold. First, insurers are not historically early adopters of new technology. Because they are a risk-averse group, they have traditionally been late adopters of new tools and technologies. They, therefore, have significant room to go to catch up.
- Secondly, the usual drivers of cloud computing, which have historically been pay-as-you-go contracts and cost savings, will likely continue. Added benefits to the next round of adoption, which will also affect the insurance industry, will be driven by the speed, flexibility, and scalability available in the cloud.
- Blockchain the term for is a distributed database that provides a secure, yet transparent way to make, record, and verify any transaction. Blockchain eliminates the need for centralized control — instead, all transactions are decentralized and confirmed by the blockchain database itself in the distributed ledger.
- There are two areas of the insurance industry that will drive the adoption of blockchain technology. The first driver is underwriting. Since this function determines whether a claim is trustworthy or not and how much can be covered, a trustworthy data repository would be valuable. A reliable data store can also be used to automate parts of the job.
- The second driver is the processing of claims. The claim processing function has many data points that need to be verified, and it is a long and tedious job. By using blockchain, all the information required for claims approval can quickly be processed.
Customer Service Improvements
- In an analysis of the current technical environment of the insurance industry, Deloitte recognized that insurance companies have long been challenged by innovative product development.
- "Working with constraining regulatory oversight, siloed business lines, legacy technology, and long-established processes and culture, how can agility and time-to-market be improved to remain competitive and differentiate in an increasingly fluid society and marketplace?"
- The challenge will be heightened by rapid, fundamental changes in society, technology, and rising customer expectations for convenience and customization.
- These disruptions, along with the demand for hybrid coverage and new product lines, are driving the need for further development in the insurance software development market. Consumers increasingly want more control over their specific coverage. For example, "a survey of life insurance consumers indicated that 90 percent of buyers revealed a preference for self-management of existing policies through digital channels."
We began by looking for expert assessments of the current and future state of the insurance software development market. We found two major reports, one from Deloitte, called 2019 Insurance Outlook — Growing economy bolsters insurers, but longer-term trends may require transformation. This report provided a detailed industry outlook on exactly this topic for 2019 and 2020. The second report, called 9 Insurance Industry Technology Trends in 2020, was written by an insurance software company that analyzed the key technology trends and what was driving their adoption.
After analyzing both reports, we extracted the three trends that would result in the most significant changes for the company that adopted them. A change was deemed significant based on the value it would provide for the customer and the company.