Never has there been a disruption in the fundamental processaround how carriers acquire, service and maintain their client basethat comes close to the scale we are experiencing today. Insurerbusiness units and their colleagues in IT operations and systemdevelopment need ways to respond to the challenge. Nobody wants tobe caught holding stone chisels in a digital world.

Fortunately, the software revolution has finally begun to lapthe insurance shore.

In our changing world, baby boomers make up the largestpercentage of the population, but millennials are the fastest growingsegment. Traditional carriers that recognize this generationaltransformation understand the need to make major changes to theircore platforms, not just to support expanding offerings for currentproducts, but also in support of digital experience and evolvinginsurance needs. And the technology-driven change in consumerbuying behavior requires carriers to adapt quickly.

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To better align business with technology units in response tothis shift, many carriers have adopted an Agile-based developmentprocess, a term increasingly familiar to insurers. The next step isfor organizations to adopt a DevOps process — aless familiar term — for software development, testing,delivery and deployment, to fully reap the benefits of Agile.DevOps is one of three wave makers of the rising software tsunami.Cloud operations is the second. And themicroservices model for application development is the third andthe least commonly heard and understood term, to date atleast.   

Insurers join the race to value

As insurers look to be nimble, they are embracing DevOps. Theapproach has — for a number of years — been thesolution delivery modus operandi of retail and tech titans such asTarget, Netflix and Amazon and helped power their legendarycustomer responsiveness and speed to market.  Encumberedby greater product complexity than most and by large legacysystems, insurers come late to the game.

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Any description of DevOps quickly devolves into a tyranny oftechnical terms. We will avoid that. In short, DevOps is developerscollaborating with IT operations to automate infrastructure provisioning,orchestration, and software deployment and management. Itremoves the barriers between the code makers and the codedeployers. In so doing, it removes much of the latency —which translates into cost overruns and delayed realization ofbenefits — that has existed for years around softwaredevelopment in insurance companies.

In the same way that Agile development techniques represented abreakthrough in how developers worked with business professionalsto deliver solutions more efficiently, DevOps is transforming theway developers and IT operations deploy and test both applicationcode changes and infrastructure changes. DevOps is a naturalevolution of Agile. DevOps puts the focus squarely on rapid andcontinuous deployment of small numbers of changes rather an all atonce "big bang" approach. It empowers the organization to trulyadopt an agile methodology, allowing the business to innovatequickly, improve efficiency and quality of code, while loweringoverall implementation risk.

Related: A design-thinking approach to innovation forcreative insurers

Take, for example, the roll-out of a new claims solution. TheAgile approach calls for a regular reveal, every couple of weeks orless, of new claims capabilities, rather than a grand entry of afully-baked new system many months after project scoping. This hasthe obvious benefit of enabling the claims organization to bettermonitor progress and make corrections along the way. DevOps in turnwill further accelerate the work by providing an automated,highly-repeatable and tested process and pipeline to push newcapabilities into production.

DevOps is one of three wave makers of the rising softwaretsunami. Cloud operations is the second. And the microservicesmodel for application development is the third. (Photo:iStock)

Cloud keeps things fast and simple

How does the cloud play in this software development anddeployment revolution? The cloud has obvious benefits related tosecurity, scalability, speed and performance. But the most valuablecharacteristic is that it provides a way to manage infrastructure and development and deployenvironments as code. Say good bye to the time-wasting andpartly-manual IT operations of installing and launching servers andapplications, and the configurations of various related services.These are among the guilty gremlins that drove latency in thepast.

Leading cloud providers have made it a central focus to simplifythese operations by using what is called Infrastructure as Code(IaC). Essentially, IaC is a DevOps practice that makes the processof managing your infrastructure much easier, more reliable, andfaster.  

Now the very same person who developed and tested the softwaremight also be deploying your new update to your doc gen,underwriting, or any number of other core and non-core systems.This constitutes a significant organizational and productivitychange as it collapses traditional operational boundaries.

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Microservices: Designing smaller andbetter

Our third avatar of the new software age, microservices, is asoftware design approach. How is it different to what we have donebefore?

Up until the present, application architects have mostly thoughtin terms of component design. But components are a part ofsomething larger and don't have value outside of the larger entity.For example, a gear is a component of an engine. The engine needsthe gear to operate, but the gear has little value outside of theengine. Architects now think in terms of designing services, whichhave innate value without being part of something larger, but stillcan participate in a larger context, increasing its value.

In the insurance context, we can visualize one of these gears asbeing a large policy process, like quote, bind and issue, or anendorsement. A micro-service approach breaks large pieces ofbusiness capability down into much smaller pieces. This makes iteasier to upgrade the larger business capabilities: just replace orupgrade the relevant microservice. And re-usable: a payment servicefor premium overpayment could also be used in a customer claimspayment.

But here is the bonus value of a micro-services approach.Microservices are expressly designed, unliketheir predecessors, to move smoothly along the software deliverypipeline. Isolation, decentralized data management and implicittolerance for failure are central design goals for microservices,making them fit neatly into a DevOps process.

Related: 5 hallmarks of insurance industry digitalleaders

Forged for the future of insurance

The software revolution is at hand and the forces are arrayed.If insurers can get the potent mix of these powerful tools right,their ability to quicken the pace of innovation and digitaltransformation will leave heads spinning in their wake. Forged onthe hammer and anvil of intense competition in the retail andentertainment sectors, these tools when put to task in insurancewill improve the speed to value equation of insurers' technologyinitiatives. They will lift the industry to meet rising customerexpectations and do commerce in the digital age.

Keven Lincoln is vice president of cloud and managed servicesolutions at insurance core systems and digitalplatform supplier EIS Group. He can be reached by sending emailto [email protected].

See also:

Enterprise software development costs are toohigh

3 best practices for collaborating with InsurTechstartups

Managing today's claims while planning fortomorrow's technology