What does digital insurance really mean?

Jul 14, 2023 by Jeremy Owenson


In brief

  • Discover why banking’s front end is all about the digital experience. Luxoft has a considerable track record in building mobile banking apps, creating visualizations and bringing innovation to the insurance space
  • Nowadays, virtually everything technology-led is called digital. But what do we actually mean by “digital?” And what’s the real impact of digital transformation in the insurance industry? 
  • It’s about time we started calling legacy apps, “heritage” apps instead. Why? Because they're still being used. And instead of modernizing, Luxoft enhances them with low-cost fixes — this article looks at how we do it


Less than 20 years ago, retail banking meant bricks, mortar and paper checks. 

To arrange an overdraft, mortgage or whatever, customers were obliged to don hats and coats, unfurling umbrellas as they joined the fractious bus lines en route to a nervy, prearranged grilling by their bank manager. 

Digital technologies changed all that. Now, most customer interactions are conducted via mobile apps which provide instant gratification. The ability to make immediate transfers digitally has seen off the checkbook. If you happen to receive a paper check, using the phone’s camera to pay it into your online account transforms the paper IOU into a digital transfer instead of a legacy piece. 

Turning our backs on hard cash after centuries of habitual use obliged banks to change their manual processes, just as the virtual elimination of checks reduced the need for high street branches. Gone forever is the familiar check-handling process where a teller examined the slip of paper and compared its signature to the customer’s bank records — in effect, a 2-day clearing process. 

Digitalization in insurance and other strands of the financial services industry was inevitable. 


What’s Luxoft got to do with it?


Luxoft has guided countless global banks from traditional to modern in three ways. 

The CX/UX visual journey. As with the change from processing paper checks to doing everything on mobile apps, the front end is all about the digital experience. Luxoft has a considerable track record in building mobile banking apps, creating visualizations and bringing innovation to the insurance app space. 

Data analytics. Understanding the data is key. Take automotive as an example. Our automotive team knows how onboard computers can be used to enhance insurance rating capabilities. Data and predictive analytics professionals understand the ins and outs of pulling in separate big data sources from here, there and everywhere. However, just like scanning bank checks onto a mobile app, you still need to interpret and verify the information, then turn it into usable digital data. Luxoft can do that for you. 

Technology modernization. Although firmly embedded, digital transformation for insurance still has to include clunky check-management procedures. But scanning checks onto a banking platform mainframe means the mainframe must be able to connect to various new banking apps. Insurance platforms need to connect to new front-ends and insurance apps digitally. 

Digital engineering is something we're very good at. Luxoft has modernized or made many old applications talk to their modern counterparts. Instead of replacing mainframes, we make apps interface with the original banking systems of record. Banks and insurers simply can't pull the plug on their core systems. 

But what is “digital,” actually?


Nowadays, virtually everything technology-led is called digital. But what do we mean by “digital?” And what’s the real impact of digital transformation in the insurance industry? 

I don't regard things like moving to the cloud as true digital transformation. To my mind, digital means data analytics. Are you creating front and back ends in a digital way? Are you designing products so you can sell them through digital channels? Here’s what we believe “digital” really means in four business areas: 


What do we mean by insurance industry digital transformation? 

The banking sector has gone through massive change, moving from a branch structure to a digital-first service. 

Digital-first customer interface 

Delivering well-designed front ends, interfaces and apps to improve customer experience and reduce the need for rekeying 

Modern architected solution 

Delivered on modern applications, enabling agility and flexibility, focusing on delivery of service 

Back-office automation 

Ensuring that apps talk to each other, delivering straight-through processing, cost reduction and seamless customer interaction 

DevOps product delivery 

Delivered on modern applications, enabling agility and flexibility, focusing on delivery of service 


1. Digital design or journey (digital-first customer interface)  

While looking for commercial building insurance quotes, one company (that claims they have digital processes) required me to complete a lengthy online questionnaire only to be informed, “we’ll ring you with a quote in 24 hours.” That's not improving customer engagement. That’s not a digital strategy for insurance. 

2. Digital engineering (back-office automation) 

To me, digital engineering is about delivering modern platforms on heritage systems — using low-code techniques to build digital front ends — or digitally connecting stuff (no rekeying.) In other words, two standalone entities bridged with open APIs. That’s digital engineering. 

3. Digital delivery (modern architected solution) 

Say you want to launch a new online product offering. Don’t build the product interface in the legacy architecture. Build another product interface between the two using low code or some modern application and fire as little as possible back to the mainframe. Build a component-based solution, so if you want to change a component, remove that element and add a new bit without changing the underlying systems. Modern, plug-and-play digital solutions apply to both heritage and modern platforms. 

4. Digital agility (DevOps product delivery)  

Include agile DevOps in everything you do. People talk about doing things in an agile way, but the truth is they need to develop an agile operation. Separate business processes into small chunks and deliver on a 6-week rather than a 6-month turnaround time. 


What about the stuff that falls outside those four categories?


I call it run-the-business. In general, firms spend 80% of their budget on run-the-business and 20% on digital insurance transformation (change-the-business.) As run-the-business gets slower and more clunky, they raid their change-the-business budgets to stay afloat, ignoring insurance digital transformation trends. 

An insurer with multiple legacy platforms created a business case to replace them with a more modern platform. However, they proceeded to cannibalize the funding to keep the old platforms afloat. The “run-the-business” operations ended up consuming the total new platform budget. This is a common issue. 

Let’s stop calling them legacy apps. Let’s call them “heritage” apps instead. They're still being used, and instead of modernizing, we enhance them. If legacy apps aren’t providing the required interconnectivity, we focus on understanding the underlying app and business requirements, then implement critical fixes rather than reengineering the whole thing. We ring-fence the “change-the-business” money to deliver incremental improvements to products and services, offering low-cost fixes. 


Here’s a quick digital analogy


It’s a bit like hiring an interior designer/decorator for the pensions industry (go with me on this). A life and pensions provider has a wonky exterior wall. The provider thinks it needs a digital front end on its legacy app to enable remote customer interaction so customers don’t go through an IFA. 

Having invested vast sums, the firm patches up its wall, building a new all-singing, all-dancing digital customer platform. Then, too late, the provider realizes that its only digital front-end interactions come from people dabbling with small pension pots. Customers sitting on huge pension pots shun the digital front end, preferring to use IFAs as usual. By employing a design company unfamiliar with their business, the Life company invested millions to attract the wrong type of client. In fact, there was nothing wrong with the wall in the first place; the designers just didn’t understand their client. 


Buy what you need and get value for money


What Luxoft says is, “Okay, let's have a proper look at the room. You might need to do more than just patch that wall, but there’s no need to strip back to basics. You've got some good walls that are worth preserving.” 

Pinpointing and focusing on the right problem enables Luxoft to deliver the perfect solution and appropriate benefits. You don’t need to replatform to automate, get better data, or build a good customer front end. You simply need to contemporize your heritage platforms. Make them fit for purpose. 


Data analytics breed better business outcomes


Luxoft supports clients adopting the cultural and organizational changes required to embed more modern, service-oriented operational models: 

  • Data analytics consultancy: Define approach. Align measurements to business outcomes and ROI. Build PoC. Establish data governance 
  • Analytics implementation: Design, install and configure a data analytics and/or full-stack data science platform. Implement bespoke predictive analytics for leading-edge use cases 
  • Managed analytics: Build and maintain data models for customer use 


Digitally curious?


If you’d like to discuss what true digital transformation and insurance automation solutions could mean for your organization and the future of the industry, contact us.





Jeremy Owenson , Digital Insurance Expert, Luxoft

Jeremy Owenson author linkedin

Digital Insurance Expert, Luxoft

During his 12 years with Zurich Insurance, Jeremy gained extensive market knowledge, from sales and the underwriting process to claims and even outsourcing (including offshore). Now, he’s concentrating on how technology can revolutionize the industry. Leveraging Luxoft’s leading position in Banking and Capital Markets, Jeremy is determined to bring fresh ideas and ML-driven underwriting to the insurance sector.