In the insurance industry, staying ahead of the curve and meeting the evolving needs of customers is a continual challenge.

Insurers want new, accessible, and affordable products that optimise customer experiences.

Their biggest hurdle tends to be inflexible and limited legacy IT systems. These systems remain business-critical in most insurance companies, yet restrict the ability to innovate rapidly.

But, says Charlotte Koep, chief operating officer of Root platform, there is no need to raze legacy platforms to the ground and start from scratch.

“Modular systems provide insurers with the flexibility to design custom, modern customer journeys which speak directly to their customers’ needs. With access to a core system connected to an ecosystem of add-on services, anything is possible,” she says.

She users a retailer selling mobile phones as an example.

When a customer purchases a phone, the retailer may offer them an insurance product at the same time. A modular system provides a workbench of tools and offerings that insurers can use to assemble a suite of services throughout the insurance lifecycle, from the moment the customer buys their phone, to their first premium payment, to the claims process should the phone ever get lost or stolen.

The 2023 Deloitte Africa Insurance Outlook report makes it clear that “digital and technological investment enables all domains of competitive advantage. Insurers must also carefully consider how to invest in meaningful partnerships with insurtechs and the non-insurance market”.

Koep says there are three key things a modular system should provide:

* Simplicity – If you think of software systems as colleagues working on two different floors, Application Programming Interfaces (APIs) are the instant messaging service that allows them to communicate and share data without having to get up from their desks each time. Because of the multitude of touchpoints in the insurance value chain, there are likely to be one or more legacy systems at work. APIs have made it much faster and easier to create and integrate these to deliver new insurance products and enhanced customer experiences. Modules provide core features and functionality, such as APIs and data access, which can then be further enhanced with add-ons.

* Flexibility – “The insurance life-cycle involves a complex set of systems but a modular system provides a series of add-ons from trusted, third party providers that allows insurers to provide services to their customers at every step of this lifecycle,” says Koep. Adding modules if and when the insurer or retailer needs them, allows far more flexibility. “So, in the example of the phone retailer, they might want to improve the customer experience by tapping into add-on services for sales, integrations with Stripe or Peach Payments to collect premiums or process credit card payments and Clickatell for client SMS communication, allowing them to take a client through the whole process seamlessly,” Koep says.

* A client-centric approach – The Deloitte report also highlights that “purchasing insurance products can be simplified, saving customers time while simultaneously providing value-add and market access”. This is a challenge when legacy systems have to be retrofitted with new technologies. However, modular systems allow insurers to cherry-pick features and systems customers want, and leave out the ones they don’t need, Koep says.

“Gone are the days of a one-size fits all approach to insurance. Customers want purpose-built insurance systems and insurers want to provide clients with the best possible experience. A modular approach, with a pick of easy to access third party functionality, ticks all of these boxes,” Koep concludes.