MP3 Players. Smart Phones. Social Media. These technologies have become so ubiquitous to our daily routine that it’s hard to remember life before them. Yet, all were introduced within the last 20 years and have continued to transform rapidly. Think about your first MP3 player, and then think about how you consume music (and podcasts) today. There is probably little comparison.
Now, consider that the average age of an installed insurance core system—across all segments—is approximately 20 years. How much opportunity has the industry missed in these two decades by continuing to embrace legacy systems while technology advanced at breakneck speed around it?
To be fair, the U.S. insurance industry (and health insurance, in particular) is one of the most regulated economic sectors. It is not, however, immune to digital change—as we can see with the rise of Insurtechs. Gigabit Magazine reports that “at least 86% of insurers think their revenues will be at risk from future technological disruption,” and investment in Insurtechs doubled between 2017 and 2018, according to FinTech Global.
Health insurers—especially those eager to explore the opportunities of Medicare Advantage plans—feel growing pressure to move with new speed and accuracy. They must be able to create new products, modify plans, execute new reimbursement models, and much more. Moreover, they need the ability to interact with members and plan sponsors intuitively and immediately through the digital channels to which they are accustomed.
Flexibility is poised to emerge as the new gold standard in health IT systems, yet many payers remain ill equipped as they remain saddled with rigid legacy systems. A majority of health insurers would agree that they should have replaced some or all of their legacy systems well in the past, yet they continue to tolerate the status quo due to the high cost of legacy transformation projects, risk—perceived and real, and the lack of staff to run and maintain modern systems.
The ability to accelerate digital transformation while fundamentally reducing risk offers endless potential for insurers. For example, they could:
Increasingly, cloud computing is the clear path forward—emerging as a powerful force multiplier that health insurers can leverage to accelerate their digital transformation.
Cloud services provide a secure and cost-effective approach to legacy modernization. They offer scalability, transparency and the ability to adjust to demand rapidly. Cloud also accelerates deployments, boosts employee productivity, improves stakeholder collaboration, and results in higher customer satisfaction. Additionally, the economic benefits of cloud computing are significant since it provides a greater value and the potential for reduced costs.
Source: Ian Campbell, CEO of Nucleus Research
Not all cloud solutions, however, are equipped for the rigors of the health insurance industry—which faces unique requirements related to security and scale. To learn more about evaluating cloud solutions for your health insurance business and begin mapping your journey, visit oracle.com/health-insurance.