The Top 5 IT Challenges Facing Insurance Companies Today
Technology is developing at a breakneck pace, and the insurance sector is no exception: In many ways, insurers have pioneered the introduction and use of digital tools. At the same time, precisely because of the rapid development of technology, they still face many IT challenges – among which we have highlighted the Top 5.
The Top 5 IT Challenges Facing Insurance Companies
Compliance: Meeting Strict Regulations
The financial sector is one of the most regulated sectors in the world. Compliance with strict and frequently changing supervisory regulations for the insurance sector as a whole often entails serious IT challenges, as each change in regulations has to be reflected in the IT systems used by the company – this brings new development challenges.
In addition to financial supervisory regulations, similarly rigorous data protection regulations are in place since 2018 – thanks to GDPR. Since insurers store and manage large amounts of personal data (think of customer databases with hundreds of thousands, even millions of records!), maintaining GDPR compliance alone involves serious IT tasks.
Digitalization: A Tool for Customer Acquisition and Retention
Today, customers’ priority is to make the insurance process as quick and simple as possible – they are reluctant to let a salesperson into their homes, let alone spend hours at a branch office. Thus, the use of digital devices in the field of customer acquisition and portfolio expansion can already be the source of competitive advantage for an insurance company.
The introduction of so-called self-service or self-care portals, where customers can take out and modify insurance or file a claim from home at the most convenient time, can result in a significant improvement in customer experience and at the same time reduce costs – instead of time-consuming personal administration requiring a lot of coordination.
Replacing paper-based customer communication with digital means also significantly reduces costs, as paper, printing and postage costs can all be saved.
Modernization of Legacy Systems: Outdated Technologies – Real Risks
A few decades ago, the financial sector, especially the insurance sector, played a pioneering role in the introduction and use of IT tools. However, this also means that many insurers still have old, well-established systems in place that are less and less up to today’s requirements – both in terms of hardware and software. It often happens that behind the attractive and modern user interface used by customers, data is stored and managed by a decades-old technology – linking the two together is becoming increasingly difficult, and the slowness of outdated technology negatively affects the frontend system and thus the customer experience.
Such technologies include AS400, DB2, COBOL, Visual Basic, COM+… and associated operating systems that have not been supported for years, such as Windows XP, 2000, 7. And they either cannot be run on today’s modern hardware at all, or only with workarounds, limited solutions that are typically no longer supported by the system’s vendor.
In addition, fewer and fewer professionals understand these technologies: The team of experts that could be counted on in the operation and further development of these systems will soon retire. These systems are no longer taught at universities, so there is no fresh supply of specialists.
Finally, the use of obsolete technology often entails IT security risks.
More and More Customer Data: Challenges and Opportunities
Insurers store more and more customer data – fuelled not only by the increase in the number of customers, but often also by the availability of more data about individual customers.
This huge amount of data must be recorded and stored in the right quality (and free from duplications), managed in compliance with data protection regulations, and analyzed using tools that are easy to use for a wide range of users in-house – which also impose additional IT tasks on insurance companies.
A common challenge is the creation of core systems: This involves the consolidation of customer databases stored in several independent systems, which enables uniform storage and management of customer data and thus uniform customer communication. Such a project also involves significant data cleansing, data normalization, and deduplication tasks, which is also a non-trivial IT challenge.
Fluctuating Demand for IT Staff: Good People, Fast and at Reasonable Cost
All of the above challenges can trigger a sudden increase in the demand for IT staff. If custom development with a strict deadline is required, for example due to the introduction of new regulations, the traditional recruitment process often cannot keep up with demand. In such cases, the involvement of external expert resources with experience in the insurance sector seems to be the best solution.
DSS in the Insurance Sector: Decades of Experience
We at DSS Consulting “speak insurance”, as we have worked with eight of the top 10 insurers in Hungary. Thanks to our decades of experience in insurance, we have deep sector-specific business knowledge, and we are well versed in typical insurance processes (e.g. fee and commission calculation) and systems (e.g. core systems, customer portals, contract management systems, reporting systems).
Our experience in solving the challenges detailed above can be briefly summarized as follows:
- Custom software development: We have developed several custom solutions for insurance companies, including classic customer portals, self-service portal solutions, fee and commission calculators. We have also supported our customers in implementing technological upgrades.
- IT contract staffing: We provide small or large IT teams (with typically software developers and testers as well as systems analysts) to several insurance companies, helping them implement their projects.
- Software testing: We have extensive experience in testing almost all typical insurance systems.
- Data migration: We have helped insurers in many cases with data migration during the replacement or upgrade of their life or non-life portfolio management systems.
- Data cleaning: In the insurance sector, the quality of customer data is key to successful operations. With the help of our data quality assurance solutions, we have cleaned and automatically deduplicated databases with millions of customer data.
- Data privacy solutions: In response to GDPR requirements, we have developed two solutions that we have implemented at several insurance companies. DSS Data Anonym enables the use of properly anonymized data in insurance systems, while GDPRoofed enables our insurance clients to efficiently perform the registration tasks of the regulation.
But Why Should You Work with a Hungarian Company?
Because Hungary has best-in-class software developers. For this, there is no better proof than HackerRank’s ranking based on their own statistics: Hungary ranks 5th on the Best Developers list globally, head to head with Switzerland and Japan and well ahead of not only Ukraine, Bulgaria and Romania but also France, Italy, Germany and the UK.
Is your company facing similar challenges? Why not discuss them over a great cup of coffee?
