From a user perspective distribution for insurance products should be simple. We should be able to define any product we want and then publish products to the entire market without assistance, quickly and easily. All parties should be able to find all products on demand and trade them consistently. We should be able to manage them centrally and conveniently and access data instantly.
Sadly, this is not the case today. Getting products to market and keeping them up to date is a huge headache, with long delays, high supplier costs and many parties to be managed. There is no unified view of the market, just a fragmented collection of interconnect proprietary platforms, with inconsistent e-trade capabilities and myriad extranets and point-to-point integrations.
It’s a huge drag on innovation and operational efficiency that is preventing the UK GI market from reaching its potental.
However, this is about to change and in this article we are going to describe how.
The current issues are mostly caused by old technology. The dominant platforms are at least 20 years old, sometimes a lot more, and it has proved extremely difficulty if not impossible for suppliers to move their bases forward to more modern technologies.
This old-tech is anchoring the insurance industry in the the past, at roughly the time when the public internet was in its infancy!
For primary policy admin systems of that era to be able to talk with each other, they needed to know what they were talking about, and so product definitions (question sets and cover details) were baked into products and these all had to match up across the different platforms that wanted to participate in e-trade. Coordinating this compatibility is a difficult problem, and the root of most of the main issues today. Polaris was created to help and has enabled e-trade for the main personal lines products. However, this is also a slow moving animal and facilitating electronic trading across multiple parties still needs multi-supplier involvement, which takes time and costs money.
Distribution woes are further compound by different channels not being handled as primary concerns of administration platforms. Web and introducer/affiliate portals and API integrations are handled outside core platforms and require yet more coordination of products and additional 3rd party involvement, leading to more cost and delays. All of this is also due to the use of old tech, most of which was designed before modern expectations of connectivity were crystalised.
This inability to advance platforms, along with the web of hard-coded connections that has developed between platforms and channels has led to stasis across the UK market.
If the problem is technology-based then you probably won’t be surprised to learn that the solution is also technology-based!
The additional computer power and internet bandwidth that is available today allows us to create platforms that have far more advanced capabilities than what was possible back at the turn of the millenium.
Modern policy admin platforms like ParaCode allow the user to describe and define their insurance products on-demand, without any involvement of suppliers. This enables the platforms to handle any kind of insurance for any kind of insurable that needs cover. It gives the platforms more intelligence about the products that they manage, such as what questions need to be asked and how, what types of cover are available, how to rate a risk and how to generate documentation. This is fundamentally different to how the dominant systems work today, which are not capable of describing the products they manage – they are just executing instructions in a dumb pre-programmed manner.
When a policy admin system understands how an insurance product works then it can tell other, similarly intelligent, systems what they need to do in order to interact with it. So now, a broker system can interact with an insurer system without either party having any prior knowledge of the other.
The broker system can ask the insurer system what motor products it has available, let the broker pick one and then ask what questions needs to be captured and what types of cover need to be offered, it can ask how to validate the information being captured. It can then formulate the right data capture process for the end user, display forms to capture and validate that data, before sending back an appropriate quote request to the insurer.
The key here is that the broker system can ask the insurer for the necessary information at the point its needed rather than it being baked-in to the platforms at both ends in advance, along with the insurers ability to provide this information and the brokers ability to use it to execute the quote process correctly. This is the core principal of Dynamic Distribution, and this is what will fundamentally free the industry from what has been holding it back for so long.
When we no longer need to get product information baked-in before we can interact, insurers can create new products and make changes to existing products on-demand. There are no 3rd parties to coordinate, no supplier charges or delays.
This applies not only to distribution via brokers but also all other channels – web, affiliate, API etc which can all be built to use the principals of Dynamic Distribution to avoid hard-coded product definitions and provide flexible, reactive interfaces that are always in tune with whatever product definition is current.
We can expect to have the ideal and straightforward situation that we described at the start of the article, we can set up and distribute any product of any type, as and when we need to.We can easily evolve them to react to changing conditions in the market.
All of this depends on the vastly greater computer and network power that is available today and it requires systems that have been fundamentally designed with this approach at their core. It’s not something that can be grafted on to platforms that weren’t built to work this way.
ParaCode is obviously an example of a platform that was built with these concepts and capabilities at its foundation and has the most advanced Dynamic Distribution available.
In the next article we will look at how ParaCode’s Dynamic Distribution capability facilitates an open marketplace where all products are accessible to all (authorised) parties and e-trade is available for every scenario.