The Year of the Platform: Mind the Gap but Look for the Edges

Designing a new insurance platform is an exciting challenge. Today, there are a number of great service capabilities available from leading technology providers that greatly enhance the insurance life cycle and value chain. Insurers can provide a digital user experience to their customers leveraging AI as a service, creating user experiences tailored to their needs.  To accomplish this, they’ve begun mining massive amounts of third party data, as well as utilizing a variety of complimentary digital services such as block chain security, to truly build a customer focused solution. They can literally close the gaps between their customers and themselves, providing a very complete user experience with the insurer at the center. Again.

Providing a complete closed ecosystem with curated services from selected third parties can be a wildly successful business model, as Apple has proven. Many people are happy with Apple Music and accept that they cannot play Spotify on their Apple speaker, limiting themselves to only what is available in that closed ecosystem. Unfortunately for the insurance industry (especially in employee benefits), there is not a single provider environment with one carrier at the center of a given value chain. Most employee benefit plans involve multiple carriers, with ancillary insurers providing focused coverages such as dental, vision, long term care, travel, etc. Insurers that don’t facilitate this cooperation with other carriers have contributed to the rise of benefit administration companies that add customer value, but also additional cost, to the value chain. Insurers need to understand and design for business and system architectures where they are not uniquely at the center of the value chain or risk recreating the closed system legacy dinosaurs they seek to retire.

This mindset shift impacts insurance platform design, where it is still good to fill the gaps within the boundaries of the offering, but it is also critical to pay more attention to how the edges of the platform are handled. A few questions to ask:

  • Can the carrier easily substitute other services for capabilities like predictive analytics, UI focused AI, and block chain security that are provided with the default platform, especially from competitors?
  • Can the platform support multiple systems of record for the same employer/insured and, if so, with a smooth customer service experience across products? Can it support legacy system interactions in the interim during a replacement project?
  • Can the core systems within the platform provide information as a service to other platforms? Can it accept direct updates through APIs out of the box?
  • Can the workflows and transactions within the platform become a service driven by a more pervasive platform such as Amazon or Google?

The last point is critically important because insurance is only the core business of insurers and, as broad business and consumer platforms become the backbone of consumer experience, even the largest and most complete insurance platform can become another service to the larger platform. For small businesses, which are a target market for many benefit insurers, the ability to be part of a larger platform that enables turnkey creation of a new business infrastructure, including HR/payroll, benefits, financials/payments, and logistics, will be critical in the next few years.

Turtles All the Way Down

Philosophers use the thought experiment of the “World Turtle” when discussing infinite regression, where the world sits on the back of a tortoise who stood on the back of another tortoise ad infinitum, hence the term “turtles all the way down”.  Business technology platforms will also begin to show this same kind of stacking where broad technological and general commerce platforms will be leveraged by more niche, vertical players, both to provide business capabilities like payment processing, and to access large subscriber networks, such as Amazon’s global reach/brand.  Insurers must become part of the larger digital economy where insurance is managed as part of larger service packages, and that means they will stand on the back of a larger platform and provide service to that more pervasive digital platform or become irrelevant.

Bottom line: The benefits market is a critical component of the larger business ecosystem, and supporting technology platforms must expect to connect to other platforms to be successful.

Look for the next blog in this series where we discuss the role of standards in an Open Core world.

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