Veterans life insurance

Yes, IBM is in the insurance technology business

“We do business with…the 100 largest insurance companies in the world,” said Mark McLaughlin (pictured), chief insurance officer of IBM.

This reality seems little known.

“The number one complaint I hear from our customers, insurtech partners and vendors is ‘I didn’t know IBM was doing this,'” McLaughlin said at the recent ITC 2022 conference in Las Vegas. “I don’t think we’ve gotten the word out as much as necessary.”

McLaughlin, speaking at the recent ITC 2022 conference in Las Vegas, explained that the company’s insurance industry business is quite significant, helping insurer clients bring together software, data, AI, security and services. IBM also offers process consulting, process automation, technical support, and hardware capabilities.

IBM’s insurance coverage includes personal lines, business lines, life insurance, employee benefits and reinsurance, McLaughlin noted.

McLaughlin, in his current role for about six months, previously managed R&D strategies for the insurance industry at IBM. Going back further, he is a 15-year veteran of IBM’s insurance practice.

Beyond the Mainframe

McLaughlin noted that many insurers are still using mainframes and have huge investments in their core operational systems, while others are considering cloud-based applications and trying to figure out how to customize this technology to suit their needs. . Still others are trying to partner with insurtechs to leverage their distribution, digital capabilities, models and new data sources. IBM, he said, works in all scenarios.

“We catalyze [products and services] through this,” McLaughlin said. “IBM really invests a lot of money in providing the kind of connective glue that helps connect legacy systems you might still need, and also modernize systems you decide you don’t need.”

The goal, he said, is to connect these pieces of technology to the data at the insurtech “layer”.

IBM is also helping insurance companies automate, he said.

“I have automation tools, AI models, I have different AI capabilities, but I need to deploy them to an average of 14 policy administration systems that insurance companies use,” McLaughlin said.

IBM has a long history of providing guidance to insurance companies, through its database tools, to help them meet challenges such as more efficient pricing. The emergence of insurtechs has led IBM to expand its focus on helping clients partner with startups. Insurers have a lot in this area they need help with, McLaughlin explained.

“People think insurtechs are trying to displace insurers…but most of them, honestly, just want to partner with the insurer and build a better mousetrap and make claims faster or market better,” said McLaughlin. “We are about to find out how you connect with [them] rapidly. The number one thing insurers complain to us about is speed to market. They know they need to deploy value-added services. They know they need to have a mobile experience that connects with insurers. Doing that and the proliferation of IT that insurers have today – it’s really difficult and time consuming.

Legacy versus the 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 declare these old networks as obsolete and useless in today’s market. According to McLaughlin, it’s not as simple as getting rid of an old system and replacing it with something new.

“You have to ask yourself ‘what are the characteristics of your insurance workload’ and ‘where is the best place to run this workload?’ In this world, theirs will be a mix of public cloud, private cloud, mainframe and specialized data appliances in… an existing data center,” McLaughlin said. “Most insurers say this is the future.”

At the same time, McLaughlin declined to make the case for specific technology that insurers need in the age of insurtech. Instead, he urges insurers to avoid “locking themselves in” to a rigid technology option.

“If you’re stuck on a core, if you’re stuck on a cloud, you’re limited in your ability to compete with insurance companies,” McLaughlin said.

Artificial intelligence and deep data analytics are also particularly useful these days to help insurers build their customer base, he added.

“We need to know our customers better [and] we need to know our risks better,” McLaughlin said. “We need to be able to deploy this information in ways that help insurance and healthcare distributors serve insurance more effectively.”