Matej PFAJFAR: We are obviously very pleased with our positioning, both in terms of breadth of functionality as well as advancement of technology. ADACTA'S product strategy has always been focused on a simple core principle: extremely short time to market for improvement and innovation, across all lines of business and process landscape. We will continue to improve our product portfolio in line with these ideas.
But, as in most industries, customer satisfaction is key and I am most pleased with the overwhelmingly positive feedback that we receive from our customers. Delivering operational transformation projects is hard and, as all vendors in this space, we must look to continuous improvement of our delivery by rigorously applying lessons learned from our mistakes. This is a commitment to customers that simply cannot be broken.
Q: The fast digitalization of the financial services providers' world, in particular in the insurance field, is creating both huge opportunities and strong challenges for the insurance industry players. Many say that the insurance industry is very late in transitioning from its centuries-old traditional form, moving into step with the digital revolution and embracing new technologies, and that major disruptions may be on the horizon. How do you see the future of insurance?
M.P.: Usage-based insurance, cloud, digital, disintermediation, disruption, shift from probabilistic to deterministic are just some of a number of words that inevitably feature in this debate. While some new technologies have a truly disruptive potential (Blockchain), I see this more as an evolution rather than a revolution. Changes will affect both the carriers' insurance product portfolio as well as the way they interact with their customers. There are certainly many interesting discussions to be had, one of them focusing on the changes that might happen to insurance products.
Motor insurance, a major source of revenue (and profit), is a good example. While it would be a stretch to say that the market has been uneventful in the past few years, the most significant changes are yet to appear.
Telematics has been around for a while now and already more than 10 million vehicles worldwide are insured through one form or another, using either specialised hardware or the ubiquitous mobile phone with an app to track mileage and/or driving behaviour. Specialised hardware fairs better in terms of sheer data gathering potential, but its high initial cost makes it less attractive for all but the highest paying customers. The utilization of mobile devices has offset this problem to some extent, but the main underlying issue remains: the fact that data only becomes available once the customer enters into a relationship with an insurer. In order for this to really serve its purpose, the access to this data must be available before the policy is actually sold and, crucially, it must include a full history of the driver. It is only logical to assume that the data will be available as a service, most likely via purpose-built sensors installed by the car manufacturers themselves and aggregated and sold to insurance companies by a new layer of service/data providers, strategically occupying the prime real-estate between the customer and the insurers. These companies will be able to command a premium for access to the market and the insurance companies will either have to compete for this controlling real-estate or cough up the money to pay for access.
Then there is the other problem - millions of car accidents happen each year and many can be attributed to driver error. Thankfully, both the company that makes your car and the company that makes your mobile phone are working hard (if not together) to make this problem go away. Further down the line, we all hope new technology will all but do away with traffic accidents - excellent news, but another major change for insurers. With the adoption of SAE Level 5 autonomous systems looking possible within a decade, a few things may happen:
- Dramatic reduction of risk: This is the one we are all hoping for - but it does mean current motor premium levels are likely unsustainable and insurance companies will need to think long and hard about how to replace this revenue stream.
- Shift of the risk mitigation burden away from the driver: Whatever risk does remain will still need to be insured, but the insurance companies will be dealing with a handful of manufacturers/ autonomous software vendors rather than millions of drivers.
- Car sharing: Statistics say personal vehicles are unused a staggering 90% and, with the introduction of autonomous cars which will drive themselves away after you've been safely transported to your destination, it seems car ownership will no longer be an interesting proposition. One more reason for thinking the traditional motor insurance model will become obsolete.
It is essentially a problem of information - the insurance industry is, in a significant part and for a number of reasons, still not:
(a)asking for information that would allow insurers to provide a truly tailored service
(b)capturing this huge new data stream
(c)applying the data to move away from »standard« products and let the customer self-direct their own, custom-made, coverage.
The average customer is becoming more educated and »insurance-savvy« - they understand when, which risks and to what extent, cannot be mitigated by themselves and should be offloaded to the insurance company's balance sheet. Product portfolios should keep pace with this trend. As an example, an insurance company should be able to create a tailored insurance offering, taking into account my disposable income, car value, other property owned, number of young children, lifestyle etc., provided I, as the customer, am willing to share the data (and doesn't my bank already have all of the above?) and the insurer is able to make use of it.
Using the data sources that are (or will become) available to gain a deeper insight into the risk profiles of its customers will allow the insurance industry to approach its market in innovative ways: it will allow the customers to affect premiums by providing additional data (telematics for motor, wearables/phones to gauge lifestyle & health profiles) and it will also allow the customers to select their coverage at a much more granular level than currently (e.g. micro-policies for a variety of life situations, mix & match coverage). None of this is easy, to be sure, but the technology is mostly there.
Last but not least, the topic that gets us excited is AI. There are vast possibilities on how this can be exploited to help push through some of the changes that we have discussed. The insurance product portfolios and the related processing requirements are going to make everything more complex. Couple this with today's requirement for infinite flexibility, instant service and straight-through processing and you can see tremendous potential in chatbots, workplace automation, MLassisted underwriting and pricing and more. Insurers, as well as us, the vendors - their partners in technology - are trying to exploit these technologies in a number of interesting ways.
Q: How does this affect your product development strategy? Is a core system simply a system of record or does it play a larger role as insurers innovate?
M.P.: The core system is at the heart of innovation. A good core system allows insurers to run a consistent operation and provides tremendous flexibility to differentiate and innovate in a number of different ways. It is future-proof and it will support the introduction of new insurance products quickly and with ease, allowing the insurer to leverage a multitude of innovative approaches and technologies on the market without fuss. Essentially, a core system is both a system of record as well as a system of differentiation.
Q: Thank you. To close, could you share your thoughts on what lies in the future for ADACTA?
M.P.: Ha, there are a number of interesting answers but the correct one tends to be - a lot of hard work! My team and I look forward to it.
With 27 years of experience, 440 people working in the group, offices in 7 countries and projects completed in more than 25 countries worldwide, ADACTA has established itself as a strong professional services company providing IT solutions, consulting and services using the Microsoft platform. ADACTA'S track record includes deals with several impressive global companies from SMB and enterprise segments and more than 400 completed projects. By developing an ecosystem of implementation and consulting partners, our solutions and services are available to support our customers wherever they are.
Through the years, ADACTA has won several awards and recognitions, including the prestigious MICROSOFT President's Club membership, MICROSOFT Country Partner of Year award, Gold ERP and CRM MICROSOFT statuses and Elite Qlik partner status. ADACTA'S strong market position today is a result of a dedicated and highly experienced team of people, strong management commitment and persistence to complete even the most challenging and complex projects.
A dedicated FinTech team of 170 FTEs, 10 years of experience developing solutions for insurance and financial industry and industry recognition by CELENT, an independent advisory firm, position ADACTA among the leading providers of insurance solutions in the EMEA region. AdInsure, ADACTA'S flagship solution for insurance companies, is recognized by CELENT as a "strong and modern system with exceptional feedback from clients". ADACTA'S insurance-related solutions are used by 22 insurers in 10 countries.