Why you need a savvy logic engine for product innovation and digital transformation in insurance

Why you need a savvy logic engine for product innovation and digital transformation in insurance?

The unprecedented COVID-19 pandemic continues to highlight the need for insurance. According to a recent LIMRA survey, 45 percent of millennials said they are more likely to buy life insurance after having experienced COVID-19. In order to understand and adapt to the trends of digital transformation, as well as outperform the competition amidst this favorable shift in sentiment towards insurance, insurers should focus more on the following areas:

  • Personalized product and service offering

The proliferation of data and connected devices, particularly wearables, enables life and health insurers to offer more tailored value proposition to customers. For P&C, we’re seeing a growing popularity of usage-based or on-demand insurance, which involves sophisticated data analytics for the ultimate personalized insurance service offering.

The industry will see not only the emergence of new types of coverage, but also increasing flexibility in product coverage. Flexible benefit offerings on a modular basis, will enable the customer to add or reduce coverage as their circumstances change.

  • Industry convergence – embedded insurance

The embedded insurance model bundles coverage or protections within a product, service, or platform. In this case, the insurance product is provided as an innate feature. It is transforming the insurance distribution model, providing insurers and their customers with a seemingly limitless number of unique and niche value propositions offered at point of sale or even in real-time. Indeed, it can be offered anytime and anywhere, and activated or disactivated, as needed.

To successfully deliver the above two key initiatives, it is imperative that insurers are first armed with a smart product and business logic engine, so they can quickly respond to the continual changes in environment and technology, not to mention ever-changing consumer needs.

Traditionally, one of the biggest hurdles insurers face, when they add or modify products, has been the endless array of internal operations that need to be consequently updated. Tedious, often repetitive, actions must be taken across many different departments to accommodate new policy features. Insurers must often apply the same update to multiple systems each time a change is made. From the agent portal to claims and billing, these modifications must be done manually, and in most cases and IT professionals often find themselves consumed with this type of work for extended periods of time. As a result, bringing new product or service to the market quickly and efficiently has been a major challenge.

Today, more and more insurers are externalizing the product configuration function, as part of the process to modernize their systems to overcome inefficiencies, thereby enhancing their ability to improve customer experience, as well as accelerate the product development process.  However, are the current product or business logic engines that they are adopting capable of addressing all the complex issues in insurance product development and operations in a seamless and speedy manner?

A truly smart logic engine should be able to serve the role of a central system that controls all the key product and business rules and logic, as part of a unified end-to-end platform, with digital connectivity and platform-agnostic features. It should be robust enough to implement end-to-end insurance quotes, binds, and policy administration solutions in real-time; complete with embedded underwriting, claims handling, fraud detection, and commission calculation/payment logic in a single space.

Once the product model has been set up, it could be used for multiple purposes and at multiple locations with flexibility for variations. Whilst this is a significant improvement and opens the door to product innovation, simply implementing a product or business logic engine isn’t without pitfalls. Sometimes higher flexibility and expandability may bring about a lack of controls and governance, creating new problems. Therefore, a truly reliable product or business logic engine in insurance needs to have strong testing capacities, and version management should be firmly put into place as well in order to reassure business users of its accuracy.

Introducing Coherent Spark, a cloud-based logic engine specifically designed and equipped with all these capabilities. Above all, it is a no-code API platform meaning product teams no longer have to wait for IT developers with specialized skills to help build and deploy a product. Knowing the key features and related business rules and logic, with a normal level of Excel literacy, they would be able to easily implement the product or service they wish to develop. For IT teams, they are able to focus less on maintenance and more on strategic projects.

In addition, it is much faster to run actuarial pricing or valuation with Coherent Spark. By setting calculation rules and logic in Excel, but conducting the model run using a logic engine that automatically converts to your desired coding languages, this process becomes significantly faster and simpler. Going forward, we are bound to witness constant business transformation, especially in product marketing and customer experience areas, with the help from more advanced analytics and the development of artificial intelligence. With market-leading solutions like Coherent Spark, insurers can accelerate product innovation, revamp customer experience and reach higher levels of excellence in digital transformation.

Doogie Noh

Sales Director (Japan)

Doogie is the Director of Coherent Japan. He holds 25 years of experience in insurance industry as an actuary and assumed a number of leadership roles including Head of Product at multiple companies such as AIA Korea, ING Korea and Samsung Life. Most recently he used to be Chief Long-Term Insurance Officer at one of the mid-sized Korean P&C Insurers, where he led broad range of insurance operations in addition to product development & management based on customer insights. As a business architect, he is always interested in UX/CX transformation using technology.

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