How Insurance Microservices Are Disrupting Monolithic Enterprise Platforms
Our industry is naturally risk-averse, so insurance business processes have been relatively slow to evolve—until now. The InsurTech floodgates are finally open and all aspects of the policy lifecycle are exposed to innovation. With technology evolving rapidly, there are so many new opportunities for insurance companies.
Insurers are depending on innovation to drive growth: pricing risk more accurately, identifying underserved insurance pools, reaching new customers. However, dependence on enterprise platforms impedes adoption of new technology and digital skillsets, both because of the monolithic nature of these systems and the need to devote resources to maintaining them.
The Monolith Can’t Keep up With Changes in InsurTech
Monolithic enterprise platforms emerged in insurance to meet demand for comprehensive functionality covering the entire policy lifecycle and all related activities. However, companies became trapped in these elaborate walled gardens while the world outside was changing rapidly. In a monolithic environment, taking advantage of new capabilities requires you to go back to your vendor or bring in specific programming expertise for a costly and disruptive long-term project.
How can insurance companies successfully break out from restrictive monolithic systems without disrupting their core business functions? Let’s look at the opportunity with policy administration microservices.
Three Advantages of Microservices Architecture
There are huge advantages to delivering policy lifecycle functionality through an orchestration of microservices, rather than a single monolithic system.
Migrate at Your Own Pace
Instead of having to build or buy an entire system that must meet the needs of all stakeholders (a substantial risk either way), you can gradually begin utilizing web-enabled insurance microservices to add or improve functionality. The ability to make a phased migration from your existing platform to microservices architecture is advantageous, compared to a sudden, complete transition from one enterprise system to another. For example, you can start by utilizing a rating microservice to take advantage of new opportunities such as ISO ERC, and you can add other policy lifecycle capabilities as your needs evolve.
Collaborate with Best-of-Breed Vendors for Each Microservice
Microservices enable a more collaborative approach to development. You can choose which aspects of the system to build in house and when to pick a vendor for things you don’t have the skills or budget to develop internally. Most insurance companies don’t necessarily need full-time ISO ERC or blockchain experts on their staff – it’s more efficient to buy these skills as a service, so you can focus your time, money, and energy on differentiators such as user experience.
Updating or replacing individual components is easy with microservices architecture. You can choose from a range of specialized vendors to find the best provider for each individual feature, rather than having to go to a single generalist software company for a one-size-fits-all platform. Vendors that specialize in specific aspects of the policy lifecycle, such as automating the use of ISO ERC for policy rating, can deliver the best-of-breed solutions you want, while leaving you free to work with other providers on the functions they do best.
Make Your Internal IT Team More Agile
Breaking out specific pieces of functionality is difficult or impossible in a monolithic platform. To make changes to one component, you typically have to update the entire system, which requires working with the vendor, and investing extra time and money. In a microservices environment, it’s easy to update or replace any component, any time.
The flexibility of microservices architecture creates opportunities for your internal IT team to learn, grow, and adapt as InsurTech evolves. New skills can be developed and new partnerships explored. Your people will be able to focus their resources on improving core services and competitive differentiators, rather than maintaining back-end infrastructure.
It’s Time to Declare Independence From the Monolith
There has always been a tendency toward one-size-fits-all technology solutions in insurance, perhaps because of a lack of understanding between underwriting and IT. But the era of monolithic platforms was challenging for everyone. High-stakes build-or-buy decisions have caused cycles of stress and fear for a generation of IT professionals, while underwriters found themselves trapped in “comprehensive” systems that never aligned quite right with their needs.
The shift from monolith to microservices is part of a broader trend toward distributed computing over the internet. Software as a Service has become the new normal, and web-enabled microsevices are the natural next step in InsurTech development.
It’s time to break free of the monolith. Ask us how Solartis can help you start taking advantage of insurance microservices.