You may say I'm a dreamer, but I'm not the only one

by Bret Stone on April 23, 2019

open ecosystem insurance interoperability

Can you imagine a world where the open ecosystem dream is a reality? A world where our collective insurance platforms talk to each other. A world where the industry moves faster and better by working together. Oasis and Simplitium along with a host of others, including SpatialKey, are on this path. While it feels idealistic, it is possible. Making data more portable between platforms—interoperability—is not something novel. It’s just fundamental and increasingly vital for long-term survival whether you’re a re/insurer, broker, MGA, or solutions provider. We all have a stake in this conversation, and a responsibility to move our industry forward.

If you attended the RAA conference in Orlando this year then you know that industry demand for an open ecosystem was overwhelming. There’s a growing voice around the realization that we are increasingly dependent on ecosystems. Inefficiencies and redundancies prevail, driven in large part by reliance on legacy catastrophe modeling platforms, and are fueling the need for greater interoperability. In his RAA presentation, Matthew Jones of Simplitium provided three key stepping stones we must embrace for greater interoperability:

  1. Avoid a monolithic ‘one system does all’ approach
  2. Minimize the number of catastrophe risk modeling platforms, while maximizing choice in models across multiple vendors
  3. Architect systems in such a way that the possibility of change is embedded within the design

Leading organizations are already heading down this path. Lloyd’s recently announced that after losing £1 billion in 2018 they’re looking to drive efficiencies, and one way is through “an ecosystem of products and services that all market participants have access to.” One size does not fit all—and a monolithic approach is a legacy approach that has proven unsuccessful time after time. Rapid innovation in risk management requires systems that are flexible, scalable, designed for change—and built in close collaboration with those who serve the industry.

More than ever, industry leaders are determined to help secure a profitable future by exploiting the collaborative value delivered through the development of an open ecosystem. This can’t be a mere aspiration. It’s imperative.

Interoperability drives efficiency

Across our industry, we need to find ways to drive efficiency gains by making data more portable between core systems. If premium is scarce, then finding ways to eliminate waste in the system is not just how you save money, but rather how you make it.

Consider this: how much time do analysts spend keying information into different systems of record? Or, underwriters for that matter. Now, think about how much that costs your business. According to McKinsey, underwriters spend 30 to 40 percent of their time on administrative tasks like rekeying data or manually executing analyses. It’s inefficient, redundant, and increases the risk of error, yet it’s a standard in our industry across every insurance workflow. This creates a massive amount of waste in the system.

Now, imagine if analysts could pass exposure data seamlessly from system to system —with just the push of a button. We work with clients to perform these types of integrations all the time at SpatialKey. Core systems must talk to each other so that insurers can reap efficiency gains while leveraging the best that each chosen provider has to offer. Modern technologies and well-designed solution architectures allow us to integrate disparate value-driving systems easily—and the only thing in our way is us!  

The market is advocating cooperation for the greater good. There will be more commercial opportunity and innovation generated through “coopetition” than by trying to knock each other out of the market. Solutions providers must find ways to differentiate that aren’t in opposition to the industry they serve.

Interoperability is “perfectly possible”

You may think it’s not possible—that the type of interoperability I’m advocating for requires too much change. To quote Dickie Whitaker of Oasis: “Don’t think it’s impossible because it is perfectly possible.” He goes on to say at a climate change conference last year, “What’s important in solving these big problems is not to be beholden to our existing culture. Our existing view. Our existing experience. We’ve got to look to others that may be able to reframe the problem in a way that actually gives us insight into solving [it].”

So, if you’re not leveraging or supporting creative partnerships and ecosystems, perhaps it’s time to consider that they present a “perfectly possible” path to interoperability.

Let’s make the open ecosystem dream a reality

We’re in an era where your solutions are only as powerful as the prowess of your connectedness. Interoperability is the name of the new game. We must make systems do a better job of talking to each other. Doing so is a step change for the industry. And, while an open ecosystem may appear to be a dream, it’s already well on its way to reality. Like we’re seeing with Lloyd’s and elsewhere, purposeful change happens when the status quo is no longer sustainable.

It’s time to reach out to your partners and tell them what you need in order to be successful. Discuss your requirements for interoperability. Drive change that inspires innovation. Edward de Bono, an authority on creative and “lateral” thinking, said “The system will always be defended by those countless people who have enough intellect to defend but not quite enough to innovate.” Will you defend the status quo, or innovate the future? The choice is yours.

Join the conversation and share your perspective. Email me directly: bret.stone@spatialkey.com

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Bret Stone is President at SpatialKey and a long-time veteran of the insurance industry. He’s passionate about solving re/insurers' analytic challenges and driving innovation to market through well-designed analytics, workflow, and expert content.

Topics: insurance technology, open ecosystem, interoperability

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