Real-time Policy Management: The Future of Insurance

The insurance industry is going through a massive transformation. With emerging technologies like artificial intelligence, internet of things, and big data analytics, insurers now have an unprecedented opportunity to evolve into truly customer-centric digital enterprises.

One area that is ripe for disruption is policy management. Legacy policy admin systems were designed for simpler products in a less dynamic world. But today's digital economy requires insurers to manage policies in real-time and align to rapidly changing business and regulatory environments.

In this post, we'll explore what real-time policy management means for insurers and how they can future-proof their business with a modern system.

The Problem with Legacy Policy Admin Systems

Most insurers currently rely on legacy policy admin systems that are:

• Inflexible - Hardcoded, monolithic systems that can't adapt quickly to new products and processes.
• Disjointed - Managing policy lifecycles across multiple systems leads to data gaps and reconciliation issues.
• Manual - High dependence on manual processes increases inefficiencies and risk.
• Not customer-centric - Outdated UIs make it difficult to get a unified customer view.

These systems were adequate when policies were relatively static documents. But today's dynamic business environment demands real-time, flexible systems.

Let's understand this better with an example.

Scenario: Launching Usage-Based Insurance Product

ABC Insurance wants to launch dynamic usage-based insurance (UBI) products for auto insurance customers. This involves:

• Collecting telematics data from customer vehicles
• Calculating risk scores in real-time based on driving behavior
• Automatically adjusting policy rates and coverage accordingly

However, ABC's legacy policy admin system is optimized for traditional products only. IT limitations make it extremely difficult to set up new UBI products and associated business rules.

After months of trying, ABC realizes the legacy system simply can't support the required flexibility. The UBI initiative gets shelved even before launch.

This scenario is all too common with legacy policy admin systems. Insurers struggle to bring new innovations and products to market quickly. Ultimately, they get left behind the competition.

Real-Time Policy Management to the Rescue

Real-time policy management solutions address these challenges through capabilities like:

• Product Innovation - Easily configure new products with flexible data models and business logic.
• Dynamic Attributes - Automatically update policy attributes based on external data triggers.
• Holistic View - Unified system for the entire policy lifecycle and customer data.
• No-code Configuration - Business users can modify configurations without IT help.
• Cloud Native Architecture - Built on microservices, APIs and event streaming for real-time agility.

With these capabilities, insurers can respond faster to market demands and quickly launch innovative offerings. Let's see how real-time policy management helps ABC Insurance with their UBI product now:

Scenario: Launching UBI Product With Real-Time System

ABC Insurance invests in a real-time policy management solution like PolicyCenter from Guidewire.

The business team easily configures a new UBI product in PolicyCenter using its flexible data model and simplified product designer. Reusable services and UI components accelerate the development.

Integrations are set up to ingest vehicle telematics data from IoT devices. As driving data comes in, PolicyCenter automatically calls rating services to calculate a risk score and determine the policy rate accordingly.

The policy price gets updated in real-time based on actual usage. ABC can launch the market-responsive UBI product within months without major IT hassles.

This agility helps ABC gain a competitive edge. They are able to experiment with usage-based and behavior-based insurance products to attract new demographics of customers.

Real-time policy management unlocks game-changing possibilities like this for insurers to gain market share and grow profitably.

Real-Time Capabilities for the Digital Era

Let's take a deeper look at the key capabilities of a real-time policy management system:

1. Product Innovation

In a digital economy, insurers need to rapidly prototype and launch new products to cater to emerging risks and trends.

For example, the growing gig economy requires covers like on-demand insurance for freelancers. With climate change, parametric insurance products linked to weather data are gaining popularity.

Legacy systems with hardcoded schemas make it extremely cumbersome to support such new innovations.

A real-time policy platform provides flexible data models and simplified product configuration tools. Insurers can design and launch modern insurance products tailored to digital-age customers with minimal IT overhead.

2. Dynamic Policy Attributes

Insurers often rely on static policy attributes defined only during underwriting. However, many emerging use cases require attributes to dynamically update during the policy term based on external data triggers.

For instance, with telematics-based UBI products, the risk profile and policy rate should automatically adjust based on real-time driving behavior data. Location-based coverage and pricing requires integrating geo-tracking data into policies.

Real-time policy management platforms have in-built support for dynamic policy attributes linked to data events. This powers real-time insurance use cases.

3. Unified Data & Processes

In legacy landscapes, policy data gets fragmented across core systems like policy admin, billing, claims and CRM. This makes it difficult to get a unified view of policy and customer.

Real-time policy platforms provide a holistic solution for managing the entire policy lifecycle and associated data on a single platform. This creates a consistent insurance data fabric across underwriting, rating, quoting, issuance, servicing and renewals.

Standard APIs make policy data readily available for consumption across channels like agent portals, customer self-service, or even third-party apps. This enables seamless insurance experiences.

4. No-Code Configurability

In traditional systems, even small changes like introducing a new business rule requires complex and time-consuming software development.

Modern platforms enable configurable no-code capabilities using tools like:

• Product designers - Build insurance products through UI-based workflow
• Decision tables - Manage rules without coding
• Template editors - Configure documents and correspondence

This allows business users to be more self-sufficient and respond faster to changing needs.

5. Cloud Native Technology

Legacy policy admin systems rely on monolithic on-premise architectures that are hard to change and scale on-demand.

Real-time policy platforms use cloud-native technologies like:

• Microservices - Break down system into independent components that can be developed and deployed rapidly
• APIs - Expose services through APIs that simplify integration across systems
• Event streaming - Propagate policy state changes in real-time across systems
• Containers & orchestrators - Package and deploy applications faster
• Auto-scaling - Scale capacity on demand based on load

This makes the IT ecosystem significantly more agile and responsive to business.

Real-World Examples

Let's look at a few real-world examples of insurers innovating with real-time policy management:

Metromile

• Usage-based insurer that offers pay-per-mile auto insurance
• Integrates vehicle telematics data to adjust policy prices based on actual miles driven
• Developed on Guidewire InsurancePlatform for rapid experimentation of new products

John Hancock

• Partnered with Vitality to offer an Apple Watch to customers at a discounted price
• Customers share activity data from the watch to earn rewards and savings
• Leverages Guidewire PolicyCenter to dynamically integrate fitness data into underwriting and pricing

Progressive

• Auto insurer that offers Snapshot usage-based program
• Collects driving data through telematics device to offer personalized price benefits to safe drivers
• Relies on the flexibility of their Radar policy system to rapidly launch and iterate on Snapshot

These insurers are able to innovate and achieve growth by adopting agile real-time policy management platforms.

Key Takeaways

• Legacy policy admin systems struggle to support today's product innovation and real-time data needs
• Real-time policy management solutions provide dynamic capabilities required in the digital era
• Key benefits include rapid product launch, flexible data model, holistic view, no-code configurability and cloud-native technology
• Insurers are using real-time platforms to experiment with IoT, UBI, on-demand and behavior-based insurance products
• Investing in real-time policy management is crucial for insurers to gain competitive edge and future-proof their business

Real-time policy management unlocks game-changing possibilities for insurers to meet the demands of the digital world. Companies that embrace such agile platforms will be in the driver's seat to grow and succeed in the marketplace of tomorrow.

1. What are some key limitations of legacy policy admin systems?

Legacy policy admin systems have fundamental limitations when it comes to supporting today's dynamic insurance needs. These systems are based on rigid, hardcoded data models which make it very difficult to configure new products or processes. They often manage policies in different siloed systems, leading to fragmented data and poor customer experience. Dependence on manual processes also reduces operational efficiency. Legacy systems lack the agility and flexibility required in the digital era.

2. How does real-time policy management help insurers innovate faster?

Real-time policy platforms enable faster innovation through:

• Flexible data models that make it easy to design new products
• Reusable components like rating engines to accelerate development
• Cloud native architecture for quick deployment of new features
• No-code configuration tools empower the business to make changes without IT help
• Open APIs allow seamlessly integrating with emerging technologies like IoT

By reducing time-to-market for new offerings, insurers can gain significant competitive advantage.

3. What are dynamic policy attributes and why do they matter?

In traditional systems, policy attributes are defined only at underwriting and remain static for the policy term. But many innovative insurance models require attributes like risk scores or pricing to dynamically update based on external data triggers during the policy lifecycle.

For instance, with telematics-based insurance, driving behavior data from IoT devices can dynamically change the risk and pricing profile of the policy in real-time. Dynamic attributes are crucial for usage-based, behavior-based and on-demand insurance.

4. How can a unified policy data model improve customer experience?

When policy data is fragmented across core systems, it creates a disjointed experience for customers. Agents lack holistic view of the customer when servicing requests which leads to delays and extra steps. Customers get frustrated dealing with multiple touchpoints to get information or make changes.

A unified data fabric across underwriting, billing, claims, CRM and analytics provides a single source of truth. This powers omnichannel experiences where customers, agents and employees get a complete view of policy and customer data.

5. What are some typical integration challenges with legacy policy admin systems?

Legacy systems often lack modern API-based integration capabilities. Exchanging data involves complex point-to-point batch integrations that break easily. This makes it extremely tedious to connect policy data with other core systems or external apps.

With real-time platforms, microservices architecture and APIs foster seamless integration. Real-time event streaming propagation also reduces lag between systems. Policy data can be consumed anywhere across the enterprise.

6. How can business users configure policies without IT help?

Real-time platforms provide intuitive no-code tools for business users to configure many aspects of the system themselves without coding skills:

• Product designers to visually model products, forms, workflows
• Decision tables to manage rules and complex logic
• Template editors to customize documents, correspondence, reports

This improves business productivity and reduces dependency on IT for every change.

7. Why are cloud platforms better for insurance policy management?

The scalability, resiliency and agility of cloud computing is a perfect fit for the performance and security demands of policy management:

• Auto-scaling to manage usage spikes
• Faster recovery from outages
• Zero-downtime deployments of new features
• Geographic dispersal for regulatory compliance
• Usage-based cost model reduces TCO

Cloud also keeps technology current and compliant for the long term with managed upgrades.

8. How much time does it take to implement a real-time policy platform?

Implementation typically takes 9-12 months based on the complexity and scope. With cloud platforms, early wins can be achieved within 2-3 months versus years for on-premise suites.

Phased roll-outs by line-of-business also help accelerate time-to-value. The right partner strategy is key for smooth and rapid adoption.

9. How can insurers migrate from multiple legacy systems to a unified real-time platform?

A structured migration approach is required to successfully retire disparate systems and consolidate into a real-time platform:

• Interface legacy systems with platform via APIs to keep lights on
• Decommission legacy systems one by one post migration in phases
• Leverage connectors to migrate data into unified data model
• Provide self-service training to users on new system
• Monitor usage to address adoption gaps

10. What metrics can evaluate the impact of implementing real-time policy management?

Relevant metrics insurers can track include:

• Reduction in time-to-market for new products
• Increase in product launch velocity
• Policy servicing turnaround time
• Call center ticket resolutions
• Digital channel adoption
• Data consistency across systems
• Business user productivity

Tracking these KPIs can help quantify the ROI of investing in a real-time policy platform.

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