The case for composable architecture in insurance

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In the insurance industry, we understand that in order to stay relevant and maintain market share, we need to be flexible, innovative and adopt new technologies. From a technical standpoint, this means that insurers must be able to quickly and sustainably adapt their enterprise architecture to reinvent themselves and grow. However, in an industry rife with legacy architectures, upgrading systems is a pressing issue. How can insurers design future systems that preserve the legacy they have created and integrate into the modern world?

Accenture is working with its insurance customers to resolve this issue. The result is a new frontier in building technological infrastructure.

The structure of the insurance architecture is changing

We need to redesign the insurance architecture for greater flexibility and growth. This applies not only to our industry. Across industries, there is a rapid transition from inflexible monolithic architecture to modular applications that can adapt to business changes through assembly, reassembly and extension. This helps organizations keep pace with changing customer requirements, supply chain disruptions, economic uncertainty and the rapid pace of technological change.

Insurance is an industry rich in data but often burdened with outdated technology. New, adaptable solutions will attract the attention of leading insurance companies. According to Gartner, by 2023, organizations using an intelligent composable approach will outperform competitors by 80% in the rate of adoption of new features.

Composable Enterprise in Insurance – What’s New

A composable enterprise can be defined as an organization that effectively delivers business results and adapts to the pace of business change. The digital architecture that enables the composable enterprise is based on a robust application programming interface (API) approach with business functions encapsulated in interchangeable components. In a composite architecture, APIs help increase flexibility and control over the ecosystem. It helps organizations democratize business processes and become a scalable digital business. For insurers, this approach opens up many opportunities to simplify and scale their digital operations. Packaged Business Capabilities (PBCs)—encapsulated software components that represent well-defined business capabilities—can be created to be easily recognizable by business users. Although the concept of composable architecture has been around for several years, we are now using the power of PBC to create truly reproducible and scalable infrastructure solutions.

What benefits can insurers get?

Using composable enterprise and PBC capabilities, insurers can scale quickly and flexibly. To build a solid foundation for your composable enterprise:

Building Modular Business Capabilities: If insurers want to create a scalable, composable architecture, they need a set of stand-alone business capabilities that can be combined to uniquely execute a business process to provide a competitive advantage. These modular business capabilities should be able to be independently managed and enhanced through participation in the larger business model.
Creating Modular Technology Capabilities: To support modular business capabilities, insurers need to create modular technology capabilities that can be easily integrated to enable smarter business models. They should be self-contained, manageable, and modular so that they can be combined through a standard interface to support the required business needs.

Thus, using a composable approach to technology architecture in insurance can be a game changer. This allows insurers to strategize for the future through design, focus on proactive building, and increase the speed of feature implementation. In the next post in this series, I will share practical examples of composable architecture in the context of insurance claims.

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