Low Code vs Legacy: The Debate Continues

Continuing our October theme on low/no code, we have some thoughts from Patrick Hayward (Senior Consultant) and Scott Martin (Consultant) from Altus Consulting.

Here they offer some insights on key questions, such as; has the industry finally ditched legacy systems or updated and integrated them successfully? There’s a whole stack of industry comment on low code vs legacy here by the way.

It’s safe to say that the industry is still on a journey, and as Altus Consulting has highlighted in a recent white paper (Service disruption: Next stop for claims), the industry is still wrestling with the constraints of legacy technology.

Most large-scale insurers have moved to a new policy admin system in recent years, or are starting this process, but it is more of a mixed picture for claims, with some operating on one of the major third-party platforms, and others still using their own in-house built systems in conjunction with offline data sources and processes.

When it comes to real innovation beyond the migration from one platform to another, such as the introduction of new AI-based capabilities, most insurers are just experimenting around the periphery of their core systems.

The reality is that examples of a truly modern architecture in insurance are rare. When core platforms are replaced, there is a strong tendency to build them around the existing processes and IT estate, rather than treating this change as an opportunity to re-design and optimise the overall model.

Ultimately, the technology is just one enabler to transformation, and it needs to be supported by wider, process, cultural and operational change. This should incorporate strong data management at its core, and the development of a model which includes the right business and technical controls to manage risks around fraud and information security.

Those who really get to the heart of it and tackle their core legacy systems and the wider architecture, will be able to meaningfully leverage the latest technological advancements.

Can no/low code empower teams beyond the IT dept, if so how?

Of course, there is a very real and valid attraction to embracing low code/no code solutions to accelerate new capabilities or seek to mature existing ones within an organisation, through automation and integration. This can empower teams outside of IT functions to begin adding their own technical value.

However, organisations must enter into this with an open mind , and more importantly, with a considered, holistic approach. Without a holistic approach, which brings with it a strong architectural governance, there is a real risk that low code/no code solutions can create issues around performance, scalability, and support.

There is the potential for important quality checks in the “development” (i.e., configuration) process to be missed which can lead to functionality errors, regulatory breaches or security issues. Regular security and regulatory assurance on the lifecycle of these applications will also need to be practiced. Additionally, alongside the governance challenges, the reality is that existing operating models do not currently provide the resource capacity for business teams to take responsibility for change delivery.

There is, however, a fundamental benefit in moving to this model across multiple systems – No-code/low-code brings with it a reduced overhead for internal technical teams as the platforms are generally provided on a SaaS (software as a service) model, reducing the reliance on internal technical expertise to keep the lights on and undertake upgrades to support the business.

Coming back to the wider operating model, introducing No-code/Low-code systems is not just about technology change, it can only be a genuine success if the business model changes, with new and updated roles, together with the appropriate change governance needed within established organisations.

Where we are starting to see this technology gain traction has been largely in insurers’ non-core lines of business, where they are testing and proving new propositions (e.g. pet, gadget, on-demand cover). The key question mark is around the direction the insurer will follow if both the products and the operating model are successful, with the options of either moving them away from the ‘test and learn’ environment onto the platforms for core products, or trust in and migrate the wider policy base to the more modern, flexible solution.

Is data sharing now truly open across the insurance sector, are we seeing the benefits?

We are not yet at a point of “Open Finance” in the context of insurance, and in reality, we’re unlikely to see take-up in the short term in the same way as we have for banking. Interactions with an insurance product are typically annual, unless there is a claim, and so there is a reduced benefit having immediate access to live data across different financial products.

One area where there has been progress is fraud management. There are national databases which are designed to combat fraud, such as the IFB, CIFAS and IFIG, and emerging AI-based technology solutions which can aggregate and anonymise data across clients, but deliver benefits in terms of learning and understanding new patterns of fraudulent behaviour.

As insurers start to develop a stronger grip on their own data, the potential for data sharing, and in particular the opportunities created by improved integration capabilities, could start to change how customers purchase and engage with their insurance products. With the ban on dual pricing starting to take effect, customers may shift away from the use of price comparison websites, and look to other brands that they trust as embedded insurance becomes a real possibility.

In order to do this effectively, there needs to be a robust data management, architecture, and governance processes in place. This will bring improvements to customer service, and enable the utilisation of new technology (e.g. AI tools).

About alastair walker 18792 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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