Greater digitalisation, more individuality, and faster – with low-code platforms

• What opportunities does Low Code offer insurers and brokers?

• How can it be used most successfully? 

The digital transformation of the insurance industry is in full swing. Particularly in matters of organisation, most companies today are positioned very differently than they were just a few years ago. The task now is to speed things up and translate these changes into specific projects. 'Low Code'  offers insurers and brokers exciting opportunities in this respect. It combines pre-programmed code with a graphical user interface and enables a faster and more dynamic response to current trends and needs. 

Low Code: a Booster for Digitalisation

When Apollo 11 was launched on 16 July 1969, the lives of the astronauts depended on the quality of the control software developed by Margaret Hamilton. She and her team had developed, tested and checked the software entirely in machine language (Assembly) and installed it in the rocket, with an estimated total effort of 1,400 full-time years. The size of the source code : only about 3 MB!

A lot has happened since the launch of Apollo 11: today, nobody programs basic functions 'by hand' any more. Libraries, frameworks, cloud services and APIs are systematically used and re-used – the proportion of self-written source code is decreasing rapidly. Low Code goes one step further and combines such 'templates' or 'pre-programmed functions' with an intuitive graphical user interface. Using these features, low-code platforms facilitate the development of complex applications with a minimum of programming effort.

The advantages are obvious: the automation of many manual activities results in an enormous speed advantage when developing new solutions. The associated short implementation cycles allow for rapid validation and iterative improvement. With the help of low-code platforms, data structures are built partially automatically, processes can be modelled visually and time-consuming tests can be run on their own. At the same time, departmental staff can also take on tasks that, in the past, would have required in-depth programming knowledge.

Advantages for the insurance industry

Low code can therefore help to create and run applications faster, and these applications are also state-of-the-art. For the insurance industry, this opens up exciting opportunities and provides answers to pressing problems:

• Time to market: 
  In agile project management, the term 'fail fast' is frequently used. However, to prevent a new idea from failing before it has even been tested on the market, it's important to make sure that appropriate market tests can be carried out quickly and easily. This is exactly where the idea of the low-code platform comes in: sales and product development can implement ideas quickly and bring them to market. If an idea proves to be viable, it can be followed up as necessary. If it turns out to be less promising, the total sunk cost is manageable. It is not just individual use-cases that can be tested in low-code platforms, but completely new business models as well. For example, it is possible to check whether the real-time processing of data from a cooperation partner's Internet of Things really works in the context of the assumptions made by its own actuaries.

• External and internal interface capability:
  Not only are the end customer's demands on insurance companies growing, but the mutual demands on the digital capabilities of the various market participants are also increasing steadily. Insurers already have to serve various interfaces such as those to comparison computers, to systems for processing syndicated business, or to other platforms. Low code can help to accelerate this 'opening up to the outside world' and the connection to third parties. And especially when insurers choose a two-speed IT approach for innovative topics. Sooner or later, the time comes when the new and old system landscapes must be interconnected. Modern interface technologies, in the context of low-code platforms, can provide an enormous speed boost here.

• Modernise and innovate: 
  Companies undertaking the digital transformation must decide whether they want to modernise the entire IT landscape first, or whether they want to focus initially on new product ideas and improved processes. Even low code will not manage to keep these two opposites isolated from each other. But it can help in running the effective handling of the two topics in parallel. This creates the opportunity to relieve some pressure from the ever-present large-scale projects and at the same time to be not just present on the market, but to be innovative as well.

• Promote cross-discipline working: 
  The fact that developer capacities in insurance companies are scarce is not a new insight. Low-code platforms can at least alleviate this problem by promoting cooperation between IT and business departments in interdisciplinary teams. Employees from the business department are enabled to take over tasks for which programming skills were previously required. IT employees are relieved of some tasks and can contribute their know-how where it generates the most value. This not only results in richer cooperation, but also creates more enjoyment in work.

Implementation challenges

Given the great advantages of low code, we may judge as quite realistic the forecast by the market researcher Gartner that every third company will use low-code platforms by 2024. But for most of these companies, there is still a lot to do before then – especially if they are in the insurance industry. Why is this? Because integrating a low-code application platform into an existing process landscape requires a certain amount of preparation:

1. Properly research and validate the business case
   Low-code platforms are offered with license models, some of which can be complex. The total development and operating costs (total cost of ownership) of the product or project must therefore be calculated over the entire expected life cycle and the variants with/without low code must be compared. The decisive factors are the provider's price model and the development/operating expenses or costs.
   
   The timetables with/without low code must also be compared. The overall situation produces an evaluation matrix of investments and time planning, which provides the basis for the decision.
   
    
2. Clarify compliance requirements
   As with any use of proprietary software components and services, it is also important in the case of low code to comply with the relevant legal and regulatory requirements (Compliance). The focus is on the various certifications, and on the auditability of the platforms and the resulting software. Other important points are the requirements for the long-term storage and adequate security of the data. These requirements must be directly aligned with the deployment options for the platform (On Premises , Private Cloud, Public Cloud). It is also advisable to work through the Master Service Agreements for the respective platforms with the legal department – especially in an international context.
   
    
3. Involve users and stakeholders at an early stage
   The most important factor for the success of a system is often not the performance of the technology, but its acceptance by the end users and its ability to respond to constantly changing requirements. Low-code application platforms create great added value here, as they make it possible to validate solutions quickly. For this purpose, however, it is essential to develop these solutions together with the actual end users. In the project, you should therefore systematically plan for access to real users.
   
   In addition to those who will be working in the low-code environment in an operational capacity, you should also involve other stakeholders such as IT security from the very beginning. Also well proven in practice when introducing low-code platforms is the advice to think about user experience and design specifications from the very beginning. When it comes to visual layout and design, many things are possible with low-code platforms – all the more important, therefore, is a clear line regarding the requirements.
   
    
4. Use the possibilities of data hubs
   Modern low-code application platforms usually offer more than just the facility to develop additional applications. With the Mendix low-code software platform, for example, existing interfaces and core systems can be integrated into a data hub through which various applications can then access data and services. These integration concepts are the company-internal equivalent of an open data strategy, which can unlock considerable innovation potential within a company. Use such strategies deliberately, so as to open the door to unknown synergies and innovations. Empower your experts to apply their expertise in a targeted manner in cross-functional teams with low-code application platforms, in order to dynamically develop entire processes, and to renew and improve them.

What's next?

Low-code platforms are still largely new territory for insurers and brokers. The competitive advantages resulting from their successful implementation are not likely to remain unexploited for long, however. In view of the enormous speed advantages when developing new solutions, this technology could be the booster stage that powers your digital transformation upwards and into stable orbit. At any rate, given the feedback received from the market so far, we forecast that this technology will climb almost as steeply as Apollo 11 did back then.

Der Artikel ist zuerst im Versicherungsmonitor erschienen