Reading today's stunning news of Chubb's unsolicited takeover offer of The Hartford reminds us that mergers and acquisitions are the one true constant in the insurance world.
We firmly believe that having flexible and nimble core administration systems is essential if you want to be able to handle a merger well. If this deal goes ahead, the technology heads of Chubb and The Hartford will get an instruction to 'rationalize our systems'. Having been on the receiving end of instructions like that in my own work history, I know that job can be pretty straightforward, or really really hard.
In today's world, if your core policy admin systems can't be accessed via APIs, can't be configured, or can't be easily changed - your system is heading for extinction in a merger. More positively - if your core platform has these modern characteristics, then dealing with change when you acquire a competitor gets easier.
So as an insurer - whether you are an acquirer or an acquiree - it is in your business interests to have a core policy administration platform that can easily deal with change and integration.
Moving toward ecosystems
But beyond that - at Sentro we think that the future of insurance will involve much more collaboration and integration between different companies. 'Open Insurance' may be a driver of that. But equally - moves to enable embedded insurance will involve tight information and service collaborations between insurers and other companies. Your core policy admin platform needs the same modern characteristics if you want live in this emerging world.
Want car insurance? Telsa has introduced Tesla Insurance. Subscribe when you buy your car. Want cyber insurance? If you process credit card payments with Stripe, you can get cyber insurance from Layr. This trend will absolutely impact in the group insurance world as well.
As an insurer, any of this innovation is really difficult to do if your core policy administration and billing systems are inflexible, inaccessible and difficult to change.
The evolution of enterprise architecture
I was a corporate CIO in the 1990s. Back then, you were really concerned about managing the cost of your central hardware infrastructure and your database licensing. Your application software goal was to have a suite of applications that covered your business needs. Your enterprise architecture strategy revolved around managing these costs well (because they were enormous). You spent a lot of time with your CFO discussing capex and opex. You actually bought server hardware. You didn't spend much time thinking about information exchange with other organizations.
As the internet era picked up commercial steam in the late 1990s, companies started offering online purchasing and early electronic commerce. Most treated 'online' as another service channel, like storefronts. There still wasn't much focus outside the enterprise.
In the last 5 years, cloud computing has matured and continues to improve. On-premises services and mainframe computing is heading for extinction as global cloud computing infrastructure solutions are available from the likes of AWS, Microsoft and Google. Enterprise architects now factor cloud centrally into their systems and compute strategies. Capex conversations with the CFO are also heading for history. Who buys servers anymore? Who doesn't subscribe to software applications?
We designed and built Sentro to be cloud-native, with a full suite of APIs.
The most forward-looking insurers are not only moving their compute infrastructure to cloud -they are positioning themselves to be able to participate in inter-company, system to system value chains. They are anticipating a future where the purchase of an insurance product actually originates as a by-product of another consumer or business purchase.
Flexibility and responsiveness is the key
As we saw with today's Chubb announcement and our collective global experience with COVID-19, things can change really quickly in today's world. As Sentro, we strive to be the 'lowest cost of change' group insurance administration platform on the market. Life comes at you fast! Being able to change and adapt better than your competitors is today's true competitive advantage.