The role of technology in insurance has never been more important, so I'm slightly bemused by this one. Whilst I understand the objective, surely the cost of entry to this space and complexity involved does indeed keep other folks out, in the same way that deciding to building a scale production car from scratch isn't really accessible to most? It costs a lot, and is not a simple straightforward process.
Equally, on the other hand, those that have invested material amounts of time and money into this space will want to protect the investment they have made into developing a product fit for market conditions, as well as supporting it and changing it on an ongoing basis.
Organisations must complete appropriate due diligence to ensure they enter relationships 'eyes wide open'. Typically platforms can be broken down a number of ways. Gartner some time back coined the phrases - 'Systems of Engagement', 'Systems of Innovation' and 'Systems of Record'. Using this, it’s easier to split the platforms out to support each of these and the business capabilities out, as well as each of the known and perceived risks in doing so. For example, in the early stages of InsurTech, much of the innovation was focused on the front office, citing that changing the back office, or 'Systems of Record', was difficult - so let’s change the front end engagement quickly.
Whoever you outsource to in terms of providing services (people, processes, technology etc), you never outsource your brand, reputation or responsibility - regardless of the contract terms. Your provider may indeed have specific and defined service levels and obligations but it’s on the provider to ensure it all comes together to meet your customer objectives.
We typically see people outsource platforms due to the complexity involved, the access to the right skills and to allow us to focus on what we do best as insurers, i.e. - create great products that are relevant for the market.
When the broader ecosystem works well together and is executed successfully, the outcomes can be truly transformational.
This morning the FCA said it would consider the impact of such switches as part of its platform market study. 'In doing so, we will explore whether technology providers create barriers to entry and prevent platforms from being able to compete to innovate and offer value for money to consumers,' it said. The regulator said 'the technology market appears to be concentrated' with only a limited number of providers to choose from. As a result it will consider whether new entrants to the platform market face high costs to find technology, and whether the limited choice mean they struggle to offer anything new.