“We do business with … the top 100 insurance companies in the world,” said Mark McLaughlin (pictured), IBM’s general manager of insurance.
That reality appears to be not widely known.
“The number one complaint I hear from our customers, from our insurtech partners and from our salespeople is ‘I didn’t know IBM did that,’” McLaughlin said. “I don’t think we’ve gotten the word out as much as we need to.”
McLaughlin, speaking during the recent ITC 2022 conference in Las Vegas, explained that the company’s insurance industry business is quite substantive, helping insurer clients pull together software, data, AI, security, and services. IBM also offers process consulting, process automation, technical assistance support and hardware capabilities.
IBM’s insurance reach includes personal lines, commercial lines, life insurance, group benefits and reinsurance, McLaughlin noted.
McLaughlin, in his current position for about six months, handled R&D strategies for the insurance industry at IBM before that. Going back further, he’s a 15-year veteran of IBM’s insurance practice.
Beyond mainframe
McLaughlin noted that many insurers still use mainframes and have huge investments in their core operational systems, while others are looking at cloud-based applications and trying to figure out how to customize that technology to their needs. Still others are trying to partner with insurtechs to take advantage of their distribution, digital capabilities, models and newer sources of data. IBM, he said, works in all scenarios.
“We catalyze [products and services] across that,” McLaughlin said. “IBM is really investing a great deal of money to provide the sort of connective glue that helps connect the legacy systems that you might still need, and also modernize the systems that you decide you don’t need.”
The goal, he said is to connect those technology pieces to data in the insurtech “layer.”
IBM also helps insurance companies automate, he said.
“I’ve got automation tools, AI models, I’ve got different AI capabilities, but I have to deploy those across an average of 14 policy administration systems that insurance companies carry,” McLaughlin said.
IBM has long provided business consulting to insurance companies, via its database tools, to help them with challenges such as pricing more efficiently. The emergence of insurtechs has led IBM to expand its focus toward helping clients partner with startups. Insurers have plenty in this area with which they need help, McLaughlin explained.
“People think the insurtechs are trying to displace the insurers … but most of them, honestly, just want to partner with the insurer and build a better mousetrap and do claims faster or market better,” McLaughlin said. “We are about, how do you connect with [them] quickly. The number one thing that insurers complain to us about is speed to market. They know they have to roll-out value added services. They know they have to have a mobile experience that connects with insurers. Doing that and the sprawl of IT that insurers have today –it’s really hard and takes a long time.”
Legacy versus the cloud
In the insurtech age, 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 pronounce those older networks as outdated and unnecessary in today’s market. According to McLaughlin, it’s not as simple as getting rid of an older system and replacing it with something new.
“You have to think about ‘what are the characteristics of your insurance workload’ and ‘where is the best place to run that workload?’ In that world, theirs is going to be a mix of public cloud, private cloud, mainframe and specialized data appliances in … an existing data center,” McLaughlin said. “Most insurers report that as the future.”
At the same time, McLaughlin declined to advocate for a specific must-have technology for insurers in the insurtech age. Instead, he urges insurers to avoid “locking” themselves into a rigid technology option.
“If you are stuck on one core, if you are stuck with one cloud, you are limited in your ability to compete relative to insurance companies,” McLaughlin said.
AI and in-depth data analytics are also particularly useful these days toward helping insurers strengthen their customer base, he added.
“We have to know our customers better [and] we have to know our risks better,” McLaughlin said. “We have to be able to deploy those insights in ways that help insurance and healthcare distributors serve insurance more effectively.”
