A Whirlwind History of Insurance Technology
The thing about technology, is some aspects change at the speed of light. To be honest we’re still not quite sure what TikTok is, or why it’s a… thing. What’s so ancient about Facebook? Or Myspace? (Just kidding on that last one). But at the same time, many of the businesses we work with are still supported by systems from the 1960s. When they were building these systems, no one thought they would still be around in 2022. In fact, schools are now starting to re-teach classes on COBOL, one of the earliest coding languages, because it’s still being used in many industries. Believe us, we didn’t see that coming either.
But let’s take a look at the WHY. Why are so many insurance companies dependent upon old systems? How did this start?
*cue wavy screens and dream-like music*
Ah, the 1960s; the skirts were getting shorter and the happy hours longer. What did our insurance industry look like back then? Well, we had massive mainframe computers filling rooms, requiring heavy-duty air-conditioning and raised floors to hide all the cables and wires. Offices were comprised of rows upon rows of desks piled high with paper, and at each one, a woman (of course) doing clerical work. We had rooms lined with shelves, bulging under the massive amount of file folders (we’ve always been an industry awash in data and facts, as they relate to the carrier’s policyholders).
It’s perhaps due to this data-heavy reliance that insurance was once an early adopter of technology. In fact, Travelers Insurance Company was one of the first companies to install an IBM mainframe computer in the 1960s. The larger insurance agents soon foll0owed suit, and by the 1970s had mini-computers, all roughly the size of a refrigerator, all developed to do invoicing and accounting.
Personal computers introduced in the 1980s opened the door for a host of systems and software that moved automation from accounting to other areas. This encouraged insurance agents to once again be amongst the first to adopt and embrace this ever-changing technology.
This all started to reverse in the 1990s. The Y2K fear caused an ultimatum: would companies replace their aging computers to try and circumvent disaster, or patch their old systems to make it through? Well, new technology is expensive. And in a time of potential chaos, untested. So instead of developing full web-enabled solutions, the industry put a band-aid on their back-end systems. Most of which we’re still dealing with today.
What reversed the tech aversion trend? Like most other aspects of our lives, the smartphone! Even though many of us are still dealing with code written in the 1980s, in languages most coders thought would be far gone by now (helllloooooo COBOL!), it wasn’t until the emergence of cloud computing and instantaneous consumer communication evolved that we realized the importance of keeping pace.
By now, the vast majority of clerical jobs have been supplanted by technology and software advances, and most of our file folders replaced by high capacity storage devices containing digitized images of the previous paper records. And with today’s technology, customers serve many of their own insurance needs, quoting, making an inquiry, and paying premiums online. Field agents file claims on the go with mobile technology.
Let’s throw some buzzwords in here – how does the Internet of Things tie in? Well, we’re glad you asked! This new technology in homes, vehicles, and buildings is making everything SMART (Self-Monitoring, Analysis, and Reporting Technology). As insurers, this not only provides rich new sources of data for pricing risks, underwriting, and analytics, but it also allows insurers and agencies to leverage this enhanced technology to create SMART risk management in response. Through AI, SMART technology, and machine learning, our policies are getting more accurate and tailor-made specific, which is beneficial for everyone involved. But again, expensive and slow.
While big insurance companies can commandeer successful software solutions, the thousands of smaller companies are often left in the dust; scrambling to piecemeal different software solutions to make do. All the while successfully retiring and replacing their legacy systems and transitioning to these solutions. That’s where we come in.