Using Low-Code to Beat the InsurTech Disruptors at Their Own Game

Angus Kennedy, CTO, Tysers

The booming InsurTech market poses an existential threat to less nimble incumbents. If your digital transformation is hampered by scarce digital development talent and hard to change legacy systems, you’re even more vulnerable. “Low-code should be part of your response,” explains Angus Kennedy, CTO at Tysers, the specialist broker at Lloyd’s of London.

The InsurTech Boom

Investment in InsurTech companies reached an all-time high of $4.8 billion in Q2, 2021, up 89 percent from the quarter before. Investors believe these tech savvy disruptors will win market share. The future looks bleaker for those falling behind in the digital race for customers’ hearts and minds.

“Most InsurTech investment is focused on distribution, which underscores that customer-centricity should act as your north star for digital transformation”

Most InsurTech investment is focused on distribution, which underscores that customer-centricity should act as your north star for digital transformation. The customer experience angle - meeting customers’ evolving needs and expectations with frictionless digital experiences - is just half of the story. It’s simplicity and the elimination of complexity that is the route to efficiency and scalable growth.

A Virtuous Circle

Aeronautics provides a useful analogy. Aircraft engineers talk of a “virtuous circle.” If you can reduce an aircraft’s weight, then it requires less fuel to generate lift. If it carries less fuel, then the plane is lighter again. Being lighter, it doesn’t need the same strength and weight in its structure - it can have smaller landing gear, for example.

A similar cycle of benefits applies to the development of insurance products. If you can reduce complexity, then you can get to market more quickly. And then you’ll have more time to improve the product to further reduce complexity.

Stripping out Weight and Complexity from Insurance Processes

Reducing the weight and complexity of insurance products and processes isn’t easy. Here are some of the challenges:

- Reliance on paper-based document-centric human workflows

- Lack of joined-up workflows result in email communications that make process measurement impossible

- Legacy systems that lack APIs cause integration gaps filled by human rekeying

- Packaged application software and SaaS products that promise an 80 percent fit cause you to burn through your IT budget as you try to fill the gap.

These traditional practices and deficient systems and processes result in slow and costly execution, which is bad for customers and insurers.

A Lloyd’s of London Insurance Broker’s Viewpoint

Parts of the London market have made great strides to overcome these hurdles, but like all digital transformations, it’s a continuous journey.

From a Lloyd’s broker perspective, the broker sits in a distribution chain between end insured, retail brokers, wholesale aggregators, underwriters, and the London market. The chain is long, complex, and expensive: each link in the chain can involve the kinds of deficiencies listed above.

So, there’s enormous value for customers if the distribution chain can be simplified and shortened. Those that can seize this opportunity will win-achieving the virtuous circle of reduced costs, growth, and continuous improvement.

How To Get Onboard a Train That Doesn’t Stop?

The list of obstacles that add weight and complexity to insurance operations wouldn’t be so daunting if digital transformation were easy. Sadly, there are more barriers to overcome for incumbent insurers to escape the ravages of InsurTech disruption.

Here, two things stand out:

• Scarcity of IT resources-the worsening digital skills drought makes it hard for incumbents to attract and retain the IT talent that they require. The $4.8 billion invested in InsurTech businesses in the first half of 2021 tells you where the talent is most likely headed.

• The relentless advance of technology-making it impossible for all but the largest firms to stay up to date with a plethora of development frameworks, Cloud technologies, and DevOps tools.

We’re at the train station, watching a stream of express trains whistle through: Kubernetes… Docker… Microservices…We’d love to get aboard, but none of the trains ever stop. And they are all full.

So, even if you’re lucky enough to hire and retain talented developers, how much of their time will they be able to devote to developing value for your business versus the time needed to keep up with relentless technology and version churn?

The Cloud Native Agility Paradox

It’s small wonder developers today complain of burnout and cognitive overload. The irony is that cloud computing was supposed to unburden IT departments.

“Without all that pesky infrastructure to manage, you’ll have vastly more time for agile innovation.”

The reality falls way short of that. Assembling a Cloud-Native development factory with all the requisite DevOps and development skills is a stretch for all but the biggest. Only they can afford the continual investment in learning required to stay current with technology churn.

As long ago as 1999, author Steve McConnell talked about a three-year half-life for software development knowledge. The difficulty of keeping up is even worse today.

Where Low-Code Fits in

We decided a low-code application development platform needed to be part of Tysers’ digital transformation strategy for reasons like these. Instead of writing thousands of lines of code, visual models, drag and drop composition, and reuse of prebuilt components dramatically accelerate development. We can accommodate more risk by truly embracing agile development and increasing the cycle pace of build, feedback, and iterate. If we need to pivot, we’re not throwing away thousands of lines of code and many months of development.

Our experience at Tysers is that adopting a low-code platform enables small development teams to deliver around three to four times faster than before. But even if you only doubled your delivery speed, the chances are that increased productivity and the business benefits gained by delivering solutions sooner would more than repay license costs.

At last, a train we can actually get on. With fewer technologies to master, we’ve been able to apply more of our time to delivering what our business requires, at a speed we could only dream of before. Each upgrade of the low-code platform gives us access to new best practice technology and security protections as they become available.

Keeping It Simple

The other big benefit of low-code is that developers operate at a higher level of abstraction. What is abstraction good for? Reducing complexity. It brackets away the complexity of the internal workings, allowing developers to sketch an application out, run it, and see how it operates.

When we work at a higher level of abstraction we rise above the particular, we engage in model building, and we can focus on what really matters to us. Exactly how low-code works, you draw up the model, it writes the code.

As a result, things become faster and less complex. Which is just where we wanted to be.

Tysers has just launched Tconnect built using low-code.

Weekly Brief

Read Also

Protect or Innovate? Cutting Through the Noise When Evaluating Predictive Models

Protect or Innovate? Cutting Through the Noise When Evaluating Predictive Models

Tom Fletcher, PhD, VP, Data Analytics, North America Life, PartnerRe
Optimizing Innovation Initiatives by Artfully Managing Change

Optimizing Innovation Initiatives by Artfully Managing Change

Lori Pon, Director, Claim Contact Center and Claim Handling Unit at AAA-the Auto Club Group
 Digital Ecosystems and Insurance - A Winning Partnership

Digital Ecosystems and Insurance - A Winning Partnership

Sean Ringsted, Chief Digital Officer, Chubb
Data Governance Systems Undergoing Ongoing Evolution

Data Governance Systems Undergoing Ongoing Evolution

Paul Pries, Director – Data Governance, West Bend Mutual Insurance Company
People as Decision-Makers; Technology  as an Enabler

People as Decision-Makers; Technology as an Enabler

Ralph LaSpina, EVP, Chief Marketing & Underwriting Officer, FCCI Insurance Group