Brokerage Ops the July/August 2020 issue

Open Architecture

Seamless, integrated technology relies on the ability of systems to communicate with each other.
By Doug Marquis Posted on July 16, 2020

But to ensure an agency is maximizing its investment in technology, it is vital that the various solutions they have adopted integrate, or “talk with one another,” to provide a streamlined user experience.

In order to deliver the best possible user experience for their customers, insurance technology providers must adopt an “open architecture” model, which refers to the ability of various systems, regardless of the developer of the technology, to connect together.

Open platforms enable data to be exchanged between systems in an easy, automated way. For example, during the lifecycle of selling and setting up a new employer with medical coverage, ideally, data would seamlessly flow between the employer’s HR and payroll systems, the broker’s CRM, AMS and quoting applications, as well as the carrier’s quoting, underwriting and policy administration systems.

The ability for all these systems to allow the open exchange of data is key to an efficient, error-free workflow. Thus, openness is an extremely important feature for decision makers to understand and evaluate when considering new technologies for their business.

Many agencies assume their technology will just integrate between various providers, but unfortunately, this is not always the case. Historically, established insurtech providers have not fully embraced openness due to a variety of factors. What this has meant for users, at times, is frustration and disappointment with their new tools that may not perform the way they had hoped.

Barriers to Open Platforms

For technology providers, there are numerous challenges that make adopting an open-architecture model difficult. For example, in the insurance industry especially, data privacy and security are paramount. When creating an environment where data can be accessed by anyone with an internet connection, it is critical to ensure that only the right people get access to the data, meaning tech providers need to be especially cautious.

Another challenge for insurance technology providers is that there has been a lack of broad adoption of modern standards, which makes integrating systems more expensive and time-consuming. Eventually, common standards will be developed and widely adopted, enabling more cost-effective and off-the-shelf plug-and-play products. But we are not quite there yet.

Another huge benefit of adopting open platforms is that it future-proofs technology decisions and provides greater flexibility to the agency down the road.

For the agencies themselves, there are also a number of challenges when it comes to adopting open systems. If decision makers aren’t especially tech savvy or don’t know the right questions to ask, it can be difficult to properly evaluate and choose insurtech vendors that can interoperate. Additionally, many agencies already have established workflows that are based on legacy systems. Therefore, they’ll need to undertake a meaningful change-management initiative to migrate to newer platforms. This typically means there is some upfront pain and even employee resistance to move to new systems and workflows.

The Open-Architecture Opportunity

All that being said, for insurance agencies, open architecture remains extremely important for a variety of reasons. Not only does it enable a more seamless user experience for both agency personnel and clients; it also streamlines operational processes. Without connected tech, employees can waste countless hours manually entering data, which can result in more errors and delays through each step in the process. But with open architecture, the user experience can be greatly improved.

Additionally, possessing integrated technology solutions enables smarter, data-driven business decisions. Today, insurers are forced to make decisions based on a fraction of the data that could be available to them if they had direct access to the right resources. An open-architecture model allows them to gather information from a number of sources they couldn’t previously access, thus enabling smarter and faster decisions.

Finally, another huge benefit of adopting open platforms is that it future-proofs technology decisions and provides greater flexibility to the agency down the road. For example, when a new insurtech vendor arrives on the market, an agency could easily integrate the new solution into its tech stack as opposed to manually transferring data. With the insurtech landscape evolving as quickly as it is, this is a solid competitive advantage over agencies that aren’t set up on open platforms.

The Evolving, Integrated Insurtech Market

Despite the many barriers to adopting open architecture, leading tech providers are beginning to understand its value and are making significant strides toward change. There are two primary drivers of this evolving philosophy. First, insurtech vendors are starting to take a more customer-centric approach to the market, looking at what their customers truly want and need. That new approach has made them realize that integrated technology is now becoming a requirement from their customers. 

The other driving force is that a handful of established insurance technology providers and a number of startup companies have now embraced the open-architecture concept. The momentum generated by these companies has made it increasingly obvious to vendors that the insurance space will ultimately follow other industries that have already moved to open platforms.

The Future of Open Platforms

As the digital transformation continues to alter the way we all do business, integrated technology will become a must-have for any agency to thrive. With continued collaboration among progressive tech providers, insurance agencies will soon enjoy frictionless, end-to-end workflows across technology from numerous parties. 

When evaluating new technologies, one of the key factors decision makers should consider is how well the new solution integrates with their current tech stack and how committed the provider is to building connections between systems. By doing that research up front, agencies will set themselves up for the best possible technology experience in the years to come.

Doug Marquis is chief technology officer at Zywave.

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