Indian Insurers Must Embrace AI and Cloud for Future Success, Says BCG Report
Indian insurers are at a crucial point where they need to innovate using new technologies like Artificial Intelligence (AI), Generative AI (GenAI), and cloud computing, according to a report by Boston Consulting Group (BCG) India titled ‘Winning with Core Transformation: Pathways to Enhanced Value and Efficiency.’
The report highlights the need for insurers to modernize their core systems to meet changing customer expectations and stand out from competitors. It points out that old core systems are slowing down innovation and the delivery of new products and experiences.
BCG’s report suggests that business and technology teams in insurance companies should work together to drive comprehensive technology transformations. The report identifies three key strategies for insurers to unlock value through core transformations:
- Offering modular, pre-underwritten products that customers can easily customize.
- Using automated decision-making processes to ensure smooth customer interactions and a strong focus on customer-centricity.
- Replacing high-touch operations with streamlined, automated models supported by AI and advanced rules.
By modernizing their core systems, insurers can improve market penetration through personalized offers, increased cross-selling and up-selling, and faster claims processing. This can lead to significant business impact and a competitive edge.
BCG India outlines three pathways for insurers to modernize their core systems:
- Building a microservices layer that abstracts key functionalities from the old core system, using the old system mainly for record-keeping.
- Setting up a second, parallel core system to gradually move products or lines of business, allowing for a phased transition.
- Building their own core systems to offer highly differentiated products and experiences, becoming more self-sufficient and reducing operational costs over time.
Common success factors across all pathways include adopting microservices-based architectures, investing in robust ecosystems, and reimagining traditional ways of working. A critical element for success is establishing a robust Control Tower to oversee the entire transformation program.
Swayamjit Mishra, Managing Director & Partner, Leads Technology in Insurance for BCG India, said, ‘The obvious & disruptive moves by insurers have been made, now winners will take the more difficult and bold step of attacking the core. The aim with the core is not to re-platform or to move to a new modern core; the aim must be to create value and deliver delight via new products, processes and experiences.’
Doubts Revealed
AI -: AI stands for Artificial Intelligence. It’s like teaching computers to think and make decisions like humans.
GenAI -: GenAI stands for Generative AI. It’s a type of AI that can create new content, like writing stories or making art, by learning from existing data.
Cloud computing -: Cloud computing means using the internet to store and access data and programs instead of using your computer’s hard drive.
BCG -: BCG stands for Boston Consulting Group. It’s a company that gives advice to other businesses on how to improve and succeed.
Insurers -: Insurers are companies that provide insurance, which is a way to protect people from financial loss by paying for things like accidents or health problems.
Modernizing core systems -: Modernizing core systems means updating the main parts of a company’s technology to make them work better and faster.
Control Tower -: A Control Tower in this context is a system that helps a company keep track of all its operations and make sure everything is running smoothly.
