Accelerating insurance IT systems to stay competitive in an autonomous world

Across the globe, car manufacturers and technology companies are speeding towards a driverless future, with spending estimated to rise to $39 billion by 2026 to support autonomous vehicles. Autonomous vehicles (AV) have already begun trials in Oxford, and vehicles with automated lane-keeping systems (ALKS), technology which controls the positive and speed of a car, have been legally defined as self-driving in the UK. Global developers of AVs and AV tech include Google, Uber and Tesla. So, it won’t be long before people around the world take their hands off the wheel.

The COVID-19 pandemic has caused people to ditch daily commutes to work and ‘stay local’, significantly reducing the amount of time spent travelling in cars. But, the future of the emerging AV market remains bright. Innovators in this market imagine various other possibilities for adoption. AVs may be bought and rented out as a taxi service, or those needing to rent a car may rent an AV.

But, no matter how this plays out, one thing is certain for the insurance industry: a driverless world means even more disruption ahead as insurers navigate the opportunities in this space.

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Driving past challenges and accelerating opportunities

The transition to autonomous vehicles will be tricky for insurers, with different levels of autonomy and technological infrastructure to take into consideration and whether AVs are carrying people or perhaps delivering goods. As they take to the roads, coverage will need to shift from today’s driver-centric model to vehicle-centric. With AVs making the decisions, risk transfers to the vehicle.

Insurers will need to be able to access and analyse larger pools of data to understand the complexity of driverless vehicles and will be expected to share insights with business partners and governments for improving AV technologies, enhancing roadways, and serving customers.

Also, insurers will face changes to motor insurance risk due to various technologies being used, such as light detection and ranging (LiDaR) which is a sonar used to map distance to surrounding objects, and the different driverless approaches adopted by AV manufacturers. These underwriting challenges will have to be met to appropriate products for coverage.

Developing different types of commercial, personal and liability coverages will be required. This is why some insurers are plotting their route to AV via usage-based insurance (UBI) which presents a natural evolutionary step. UBI depends on telematics and heavy data processing and can crossover the product silos between personal and commercial coverages. They are upgrading their IT capabilities to meet the unique requirements of UBI with an eye on AV insurance.

For all motor insurers, this means it’s time to make strategic insurance technology decisions to adjust quickly to new market demands. It’s time to go beyond monitoring developments in the AV industry and accelerate responses. Updating legacy IT systems and innovating technology is the key to developing appropriate products and keeping up with this fast-paced market.

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Innovation starts with shifting gears to the right technology

To stay competitive, insurers need to address their technology infrastructure capabilities. Legacy IT systems are inherently slow and stiff, limiting how quickly insurers can roll out new products and services. Insurers need to make sure their core systems are up to the task. Insurance IT teams should look for solutions that are scalable and provide end-to-end insurance functionality.

Coretech is the answer for those who are stuck in the past and need to catch up to keep up. Coretech is a new approach to core insurance platforms which is created with microservices, APIs and event-based workflows which support easy integration with insurtechs, data, and service providers to support emerging business models. These solutions take an innovative approach to meeting complex real-time demands created by driverless vehicles, while focusing on a customer-centric approach. Coretech also ensures systems maintain privacy protocols as well as resist cyber attack, which is a main concern in the AV industry.

This next-generation technology – which shares the DNA of new insurtechs and the broad functionality of enterprise core systems – provides businesses with tools to adjust to rapidly changing market demands and simplify deployment and maintenance. Coretech platforms allow insurers to innovate by being open and easily adaptable to business needs. This enables insurers to have unrestricted inbound and outbound interactions with customers or third-party systems, through open-source APIs and events.

A key attribute of a coretech system is being cloud-native. Solutions which are designed for the cloud are rapidly scalable and resilient, allowing insurers to grow their businesses as demands increase – which is inevitable as AVs become more readily available.

The benefits of Software-as-a-Service (SaaS) delivery also empowers insurers to focus on their core business, knowing it’s delivering high-quality performance, reliability, security and compliance. Not to forget the advantages of reduced need for IT training and increased management efficiency through cross-platform Infrastructure-as-Code (IaC).

It’s important for insurers to establish the right IT infrastructure to power their product offerings for AVs. By saying goodbye to legacy systems and implementing coretech solutions which enable insurers to do the job right, they will be well prepared to win in an autonomous vehicle world.

Written by Jess Hurley, P&C marketing lead at EIS

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