“We do business with … the top 100 insurance companies in the world,” said Mark McLaughlin, general manager of IBM Insurance (pictured).
This reality does not seem to be widely known.
“The number one complaint I hear from our customers, our insurtech partners, and our salespeople is ‘I didn’t know IBM would do that,'” McLaughlin said recently in Las Vegas said at the ITC 2022 conference. “I don’t think we got the word out as much as we needed to.”
Speaking at the recent ITC 2022 conference in Las Vegas, McLaughlin explained that the company’s insurance business is quite substantial, helping insurance companies bring together software, data, artificial intelligence, security and services. IBM also provides process consulting, process automation, technical assistance support and hardware capabilities.
IBM’s coverage includes individual lines, commercial lines, life insurance, group benefits and reinsurance, McLaughlin noted.
McLaughlin spent approximately 6 months in his current role, having previously handled R&D strategy for the insurance industry at IBM. Going back further, he is a 15-year veteran of IBM’s insurance business.
Beyond the mainframe
McLaughlin noted that many insurers are still using mainframes and investing heavily in their core operating systems, while others are working on cloud-based applications and trying to figure out how to tailor the technology to their needs. Still others are trying to partner with insurtechs to leverage their distribution, digital capabilities, models and updated data sources. IBM fits all scenarios, he said.
“We catalyze [products and services] Across that,” McLaughlin said. “IBM has really invested heavily in providing a connection glue that helps connect legacy systems you might still need and modernize systems you didn’t think you needed. “
The goal, he said, is to link these technological pieces with data in the insurtech “layer.”
IBM is also helping insurers automate, he said.
“I have automation tools, AI models, I have different AI capabilities, but I have to deploy those capabilities in the average 14 policy administration systems that insurance companies carry,” McLaughlin said.
IBM has long provided insurers with business consulting through its database tools to help them address challenges such as pricing more effectively. The emergence of insurtech companies has prompted IBM to broaden its focus to helping clients work with startups. McLaughlin explained that insurers have a lot to do with this.
“People think insurtechs are trying to replace insurance companies…but honestly most of them just want to work with insurance companies to build a better mousetrap, make claims faster or market better, ‘ McLaughlin said. “We’re about, how do you [them] Rapidly. The first thing insurers complained to us was speed to market. They knew they had to introduce value-added services. They know they have to have a mobile experience to connect with insurance companies. Doing that and the IT sprawl that insurance companies have today — it’s really hard and it takes a long time. “
Traditional and Cloud
In the age of insurtech, some insurers are getting rid of their old legacy systems and replacing them with cloud-based platforms that are easier to adapt and modernize. Insurtechs, in turn, often claim that these legacy networks are outdated and unnecessary in today’s market. According to McLaughlin, it’s not as simple as getting rid of the old system and replacing it with a new one.
“You have to think about ‘what’s the character of your insurance workload’ and ‘where is the best place to run that workload?’ In that world, theirs will be public cloud, private cloud, mainframe and dedicated data appliances A mix of…existing data centers,” McLaughlin said. “Most insurers see this as the future.”
At the same time, McLaughlin refuses to advocate for specific must-have technologies for insurers in the age of insurtech. Instead, he urged insurers to avoid “locking” themselves into rigid technology options.
“If you’re stuck on a core, if you’re stuck on a cloud, then your ability to compete with insurers is limited,” McLaughlin said.
Artificial intelligence and deep data analytics are also particularly useful today to help insurers strengthen their customer base, he added.
“We have to understand our customers better [and] We must better understand our risks,” McLaughlin said. “We must be able to deploy these insights in a way that helps insurance and healthcare distributors serve insurance more effectively. “