The Modern Insurtech “Tech Stack”
The Modern Insurtech “Tech Stack”
While some may look at the recent negative press and abysmal stock performance surrounding public insurtechs and assume that the insurtech threat is receding, the insurance industry’s digital transformation is inevitable.

It is therefore imperative in my view that CIOs regularly benchmark their tech stacks vs. their peers and emerging digital carriers/MGAs to future-proof their organizations.

At this point, it’s much easier for the casual observer to point out what insurtechs are getting wrong (e.g., loss ratios, unit economics) vs. what they are getting right (e.g., modern technology infrastructure, delightful customer experience, innovative product design). It may take several years for startups to figure out unit economics at scale but make no mistake, insurtechs plan to “weaponize” their technology to challenge incumbents as their books mature and loss ratios normalize.

With this in mind, it may be interesting to imagine how CIOs could build their technology infrastructure if they were starting from scratch today. What does the modern insurtech “tech stack” look like and what does this architecture enable for tech-forward insurance companies?

Cloud-based Microservices Architecture

While most legacy insurers are in the early or middle stages of a multi-year, multi-million-dollar cloud transformation, new insurtech MGAs and carriers are built on cloud infrastructures, giving them flexibility to plug in a variety of 3rd-party tools and data sets into their tech stack.  

A microservices architecture allows larger applications to be separated into smaller independent parts, each having its realm of responsibility. Product and IT teams can implement iterative development processes and upgrade features flexibly.

Most insurance companies have deployed tools for use by internal service staff, but the industry is still far from offering true self-service capabilities for brokers and policyholders”

A modern data pipeline connects internal and external data sources, cleans, and structures data, and delivers individual risk and portfolio/management level insights directly into workflows.

Further, API gateways are vital for communication in a distributed architecture since they create the main abstraction layer between internal and external microservices. We have already seen a few traditional insurers begin to separate themselves from the laggards by focusing on building external APIs.  

Digital Rate, Quote, Bind

The most prominent example of what a modern technology infrastructure enables is the ability to digitally rate, quote, and bind insurance with minimal questions for the applicant. These questionnaires can be answered directly, through a broker portal, or embedded within a channel partner’s customer experience.

Many carriers have APIs for “rate call 1” (initial quote offered by an insurer based on high-level data), few have APIs for “rate call 2” (more accurate quote validated by additional questions and enriched by third-party data), and even fewer can enable “rate call 3” (fully bindable quote for purchase). However, the most cutting-edge personal lines insurtechs, such as Openly and Branch, deploy a “single rate call” acquisition strategy that delivers a fully bindable quote in less than thirty seconds with only name, address, and date of birth.

On the commercial side, “main street” business can be quoted with business name and address (augmented with third-party data), and cyber insurers such as Corvus and Coalition use proprietary technology to grade the cyber vulnerabilities of applicants to deliver an accurate quote via APIs.


The initial sale of the policy is just one step in the customer lifecycle. Significant overhead is spent by carriers on servicing existing customers. Most insurance companies have deployed tools for use by internal service staff, but the industry is still far from offering true self-service capabilities for brokers and policyholders.

A microservices architecture with APIs that passes data across systems enables insurers to offer stakeholders the ability to process more service requests without carrier employees. For example, modern broker and customer portals provide a variety of self-servicing capabilities, including mid-term endorsements, mortgagee changes, certificate of insurance issuance, additional named insureds, and cancellations.

Modern Workflow

What about processes not amenable to fully digital, “straight-through processing” such as middle market and large commercial underwriting or claims above a few hundred dollars? This is where modern, customizable workflow tools such as Snapsheet, Federato, and Send Technology come into play. These tools allow claims adjusters and underwriters to automate specific components of their workflows and prioritize the accounts they should be working on to maximize efficiency. They take the institutional knowledge that resides in the heads of claims adjusters and PDFs of underwriting guidelines and make them actionable at precisely the point in time where this information is needed.

These tools look and feel like enterprise software tools like Trello, Pipedrive, and Salesforce, but they are purpose-built for the nuances of the insurance industry. Importantly, as these tools are built using API-driven microservices, an insurer with a modern tech stack can choose which modules or services are relevant for their business use case and decide whether to surface the functionalities inside of an internal UI/UX or work directly in the vendor’s UI/UX.

In Closing

Public market insurtechs are nursing their losses today. But these businesses (and other well-capitalized companies in the private markets) continue to present a credible threat to incumbent players in the long term. There is an opportunity for large carriers to adopt the infrastructure of challengers and beat them at their own game.

Source: Insurance Outlook

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