Microservices represent a new approach to software applications for business and industrial insurance. Instead of one large monolithic program, there are many independent units which can interact with each other. The previous parts of our series introduced the functionality of this technology and explained the basic benefits. This third part describes some particularly important benefits in more detail. The focus is on the adaptation of the customer experience for each individual. This aspect is of enormous importance and is driving business growth in the digital age. Microservices break through the insurance industry’s traditional value chain and establish new structures – this is equivalent to a paradigm shift.
Customer experience becomes the decisive feature
Digital technologies allow customers to access helpful services – often without any personal contact with an insurance broker. Instead, customers can now find these services online, and thus the sales pitch loses its importance as a central factor governing a decision to take out insurance. That’s why it’s important to understand which criteria actually are crucial in this climate. The focus is on the user experience: If a customer gathers the impression that an insurer provides a good solution for his wishes and requirements, he will then decide to conclude the contract. The inference here is that a good customer experience requires more than just an attractively designed website. Beyond this, the ability to access customised products plays a major role. Standardised services now inspire relatively few customers, so therefore it’s more effective to divide these offers into very small separate units. This makes it possible to design insurance products for each individual customer. It also makes sense to set up software for these tasks, because large unified programs make it difficult to design custom products which can then be tailored to a customer’s needs. Yet a flexible structure based on microservices is ideal for this task.
The traditional value chain is now broken
Digitalisation is tearing apart the value chain established in the insurance industry over many decades. Instead of a strictly linear chain from the insurer to the individual sales representative, today’s customers can experience direct contact with the insurance company. In addition, customers can now use a variety of different channels, which generally include online portals, chats and smartphone apps. Of course, providers can also be contacted by phone or e-mail, and it’s now possible to use artificial intelligence for customer communications. All of which means that the large insurance companies now have to rebuild their sales channels because it has become essential to provide access to individual services through many different channels. This is a task for which large monolithic programs are not particularly well-suited. Their rigid structure makes it tedious and expensive to add further communication channels. However, micro services allow a diverse range of very different channels to be integrated via an interface.
Microservices also bring great challenges
The two previous sections demonstrate that microservices offer many benefits for insurance companies in the digital age. They allow products to be individually adapted to meet the specific needs of different customers. They also make it much easier to provide multi-channel contact with the insurance company. As a result, microservices contribute to an improved customer experience, and this technology also allows offers to be quickly adapted to meet changing customer requirements. However, this innovation also brings great challenges. Microservice architecture is very complex and demands some sweeping changes to many current business processes. That’s why it’s important to plan such developments very carefully. Any implementation will require a high level of expertise to guarantee this innovative structure can be introduced successfully.
Conclusion: A gradual conversion to microservices makes sense for insurers
Switching to microservices seems to be the way to go in the digital age. A monolithic program is ill-equipped to respond to customer requirements, leads to a negative customer experience, and inevitably results in a significant decline in competitiveness. However, since the change also represents a significant level of challenge, a cautious approach is advisable. Instead of opting to simultaneously replace all systems with microservices, it makes more sense to choose a step-by-step approach. This will help insurance companies to gradually assemble a platform which can meet their requirements over the longer term. They will thus acquire the agility and speed they need to meet the demands of the digital age in a manner which is both innovative and practical.
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Part one of this series: Microservices: An Innovative Platform for Insurers (Part one)
Part two of this series: Microservices – Data Exchange in Real Time for the Insurance Industry (Part two)
This article was first published on LinkedIn.