Over the last seven years of my career, I have been lucky to witness the evolution of group insurance technology across its entire life cycle. I have been fortunate to spend hours talking with group insurance companies about their technology priorities and how they plan on modernizing their infrastructure to be more competitive and agile through combinations of cost reductions, more automated manual processes, improved customer experience, and product portfolio expansion or revenue growth. On the other side of those conversations are the solution providers of all stripes. In speaking with them about how they are addressing market needs and building products, one thing is clear: for you, the potential customer, picking the right technology partner is not an easy task.
The Technology Partner Need and Challenge
Hopefully, the days where group insurance companies’ operations and technology teams are completely siloed and without a combined vision are coming to an end. Most insurers now see technology as a strategic advantage that can be leveraged for innovations once considered impossible.
As a group insurer in today’s world, defining a digital roadmap is a task most have undertaken, to some extent. The end result is deciding which group insurance technology partner best matches the required needs, how to actually implement new technology, figure out how much it ultimately costs, and most importantly, determine the final ROI.
Insurtechs vs Established Solution Providers
As the lines continue to blur between true immature insurtechs, and the established technology vendors trying to mask themselves as insurtechs, the burden falls on the insurer to see through the smoke and mirrors to grasp what these solution providers’ core competencies really are and determine their ability to successfully deliver the appropriate solution. There are two ends to this spectrum: at one end, solution providers with great technology and a true understanding of the insurance business, but without the ability to market themselves well. At the other are the technology companies with great marketing and sales efforts with little-to-no subject matter expertise in complex insurance markets, with subpar technology and delivery records.
I have also seen a drastic shift over the years in the desires of insurers’ preferred modernization approaches. They have transitioned from wanting to implement a best-of-breed approach, to today where more insurers are looking for end-to-end solutions. But the problem this shift has created is a further amplification of insurtechs versus established solutions, where both incumbent solution providers and true insurtechs masquerade as one-stop shops. This leaves insurers tasked with understanding what these solution providers can actually deliver. I believe that newer market entrants are taken more seriously and vetted more thoroughly than three to four years ago, but when it comes down to a final decision, trusted and proven solution providers are still winning the business. There have been some exceptions where insurers are willing to be guinea pigs and take a chance on an unproven solution. This scenario usually involves a bare-bones implementation strategy and an attractive price point to entice the insurer to take the risk of being the first customer to go live on a new solution. But then, the problem shifts to how the insurer evolves the software skeleton to become the actual necessary solution. This is usually where the quick delivery and cheaper price points go out the window and delivery timelines and total costs become more aligned with standard insurer expectations, i.e., not so fast and not so cheap.
Spotting the Pretenders, Finding the Partners
So, how can you spot a pretender?
There are several contributing factors to what separates the real solution from the rest. First, consider the solution provider’s target markets. Are they focused on a few similar lines of business, or are they trying to build solutions across all financial services and beyond? It is important to know that the solution provider is dedicated to your market, and that they have the resources and the willingness to address future enhancements and product needs.
Delivery track record is also vital to selecting the right partner. Solutions that demo well and promise the world are nice, but what is the delivery track record for what you are asking them to build, if they even have one? How big where those projects? Have they ever moved past a proof of concept to build a more powerful, well-rounded solution?
Another critical question: Where did the ‘A’ team go? Often solution providers bring out the best and brightest stars for demos and the sales process, but those folks often disappear at project launch. Understanding what resources will be available on your projects is a key element to making sure that the ‘A’ team stays with your project for the duration.
Also, remember cost. All too often, I have seen insurers drawn in by unrealistic pricing that only accounts for 1/100th of the functionality that is actually necessary. It ultimately balloons to something that is way more than expected and will become more costly and time-consuming than originally promised. If it sounds too cheap and too fast, hit pause and dive into what will actually be delivered. These technologies are coming together with complicated products that have nuanced rules and regulations and rarely can work with everything that comes out-of-the-box.
Search Suggestions
There are plenty of great resources to help insurers navigate all the hurdles that present themselves in selecting a technology partner. Do your research and have honest and transparent conversations with the solution providers you are vetting every step of the way. Be open to listening to the advice from the solution provider, and keep in mind that some have done way more of these projects than you ever will and know the pitfalls to avoid. Treating these relationships as the true partnerships that they are intended to be will go a long way toward getting you the solution that is right for you and your company.
