Mumbai (Maharashtra) [India], August 20 : Indian insurers stand at a critical juncture where the rapid digitization of the last decade is now being met with demands for innovation driven by emerging technologies like Artificial Intelligence (AI), Generative AI (GenAI), and cloud computing, stated a report by Boston Consulting Group (BCG) India titled "Winning with Core Transformation: Pathways to Enhanced Value and Efficiency."
The report emphasizes the pressing need for Indian insurers to modernize their core platforms to meet evolving customer expectations and effectively differentiate themselves from competitors.
It identifies the legacy core systems as bottlenecks in insurers' efforts to innovate and deliver new products and experiences in a rapidly changing digital landscape. BCG's report highlights the unique opportunity for business and technology teams within insurance companies to collaborate and drive holistic, business-centred technology transformations that could be decisive for their future success.
BCG's analysis identifies three critical levers for insurers to unlock value through core transformations.
The report underscores the importance of offering modular, pre-underwritten products that allow customers to tailor their insurance coverage seamlessly. Insurers are encouraged to use automated decision-making processes to ensure smooth customer interactions, 360-degree communication, and a strong focus on customer-centricity.
Insurers are advised to replace high-touch operations or underwriting-heavy processes with streamlined, automated models supported by AI and advanced rules. By eliminating redundancies and pain points, insurers can enhance self-service capabilities across multiple channels, leading to higher efficiency and better customer experiences.
The transformation of core systems presents insurers with the opportunity to drive up market penetration through personalized offers, increased cross-selling and up-selling, and accelerated claims processing. By leveraging modern technology and reimagined processes, insurers can create significant business impact and secure a competitive edge.
BCG India's report offers three distinct pathways for insurers to undertake core modernization, each tailored to different business contexts and technological starting points.
This approach involves building a microservices layer that abstracts key functionalities from the legacy core system, using the legacy system primarily as a record-keeping mechanism.
This method is particularly suitable for incumbent life insurers or those with substantial long-term policy portfolios.
Insurers may choose to set up a second, parallel core system as a challenger to the existing one, moving products or lines of business incrementally rather than through a single, large-scale transition.
This phased approach allows insurers to focus on high-value flows while managing a temporary multi-core environment during the transition.
A more radical approach, some forward-looking insurers with significant in-house technological expertise are opting to build their own core systems.
This pathway allows them to offer highly differentiated products and experiences while becoming more self-sufficient and reducing operational costs over time.
The BCG report outlines several common success factors across all pathways, including adopting microservices-based architectures, investing in robust ecosystems that involve both in-house and partner-led solutions, and reimagining traditional ways of working.
A critical element for success, as highlighted by BCG, is the establishment of a robust Control Tower that oversees the entire transformation program, acting as an orchestrator across techno-functional areas to ensure full value capture.
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."
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