Software-as-a-Service solutions for greater flexibility and efficiency in core systems
According to a PwC study published in August 2024, 75% of insurance companies in the DACH region (Germany (D), Austria (A), Switzerland (CH)) plan to replace or modernize at least one core system in the next three years. Many companies are pursuing mixed strategies in which legacy systems are partially retained or modernized in parallel. The goal is always to increase the degree of automation and integration capability.
The renewal of core insurance solutions within the insurance industry is a complex undertaking overall, involving the renewal or replacement of what is essentially the heart of the business. Insurers often face the considerable challenge of providing the necessary capacity for such a project and thus adhering to the implementation roadmap within the planned time frame. In order to reduce the complexity of such projects and also to keep the subsequent maintenance costs within a healthy cost/benefit ratio, it is advisable to carry out an implementation close to the standard and to use the corresponding prefabrication of a standard software provider.
As a result, insurers in the property and casualty (P&C) sector are increasingly turning to (SaaS) for their core systems. This trend is driven by the need for flexibility, scalability, and increased efficiency. The shortage of skilled workers is also a major driver of SaaS offerings in the core insurance market. As part of the respective SaaS offering, insurers not only receive E2E process coverage, but also a tailored solution in operation with the implementation of the respective regulatory requirements from DORA. In the future, this will be supplemented by the corresponding requirements from the AI Act.
Advantages of SaaS for insurers
SaaS enables insurers to scale their systems flexibly and achieve a short time to market. The insurance market is also becoming increasingly dynamic and requires quick and tailored responses to the challenges within the respective P&C product lines. In particular, new challenges, such as increasing cumulative events due to large-scale weather conditions or the optimization of the combined ratio, require a high degree of flexibility in product, customer, and claims management. Modern SaaS solutions provide the technological basis for these requirements by being scalable, expandable, and always kept up to date.
Furthermore, a product-centric approach can minimize the need for adaptation through additional developments, as the respective product content can be implemented in a standardized manner via configuration and generation. This not only ensures efficiency but also stability. With msg.Insurance Suite P&C SaaS, respective insurers have exactly this option across the entire E2E process: from rating, offering and applications (TAA – Tarifierung /Angebot/Antrag) to claims processing and commission settlement.
Integration challenges are solved by predefined integration points
The integration of SaaS solutions into existing IT infrastructures usually presents challenges for insurers. In the context of Software-as-a-Service approaches, it is therefore advisable to define and prepare integration points in advance. This eliminates the need for integration platforms and reduces maintenance and implementation costs.
In addition, it makes sense to incorporate as many components as possible into a SaaS solution in order to fully leverage the benefits of such a platform. This means, where possible and necessary, bundling functions beyond the core system there as well. The msg.Insurance Suite offering therefore also includes solutions for input and output management as well as data evaluation.
Conclusion
The introduction of SaaS in the core systems of property insurers is a significant step toward digitalization and increased efficiency. Despite numerous challenges in integration and modernization, many insurers see SaaS as the sustainable solution for meeting the increasing demands of the market. If you would like more information about our msg.Insurance Suite P&C based on Software as a Service, please contact us at nexinsure@msg.group.
