Technology architecture key to avoiding ‘Boeing 737 misalignment’, insurers warned

When it comes to technology strategy, most insurance companies are actively behaving like Boeing in its well documented case of technology “misalignment with the 737 Max”, delegates heard at the Intelligent Automation event being held in London today (Tuesday May 21).

Speaker Jason Crabtree, CEO at Fractal Industries, made the comparison to illustrate what can happen when technology architecture gets “out of sorts” with the business problem it was brought in to solve.

Speaking as part of a presentation called ‘From Tactics To Strategy: Enable Pre-Bind Analytics, Scenario Modelling And Human-Machine Collaboration To Drive Competitiveness,’ sponsored by Fractal Industries, Crabtree explained the thought processes and situations that can lead to serious technology misalignments.

“I have an urgent business problem, I go ahead and source a solution, I’ll try and do something based on competitive pressure without getting the architecture right.

“Then we go through a series of compensating types of decisions that get us further and further from the actual goal we sought and end up creating real misalignment between the people doing these tasks and you end up with software fixes that are bolted on as increasingly dangerous bandaids over the underlying issue.

“We wanted to make better decisions but we’re doing it with a late night diet pill equivalent instead of a balanced diet and a bit more effort.”

He said the challenge is that insurers are often trying to deal with three related problems, “we want to make better decisions, we want to make them just in time, just in context and just in place”.

The world’s best answer in infinite time is not particularly relevant, he said.

“So in our world we think about how we improve the underwriting process, move down the premium scale, while still improving risk selection and thinking about dynamic types of accumulation management.

“We are in a position where we have to do a portion of the analytics and patch results, or look at a portion of the problem very efficiently and identify when we could do very expensive but slow things that we may want to do. So thinking about architecture and core large scale aggregation problems, among others is really important.”

He said there was a lot of knowledge and expertise inside insurance organisations that is much better suited than a lot of the start ups to creating really disruptive types of products because they have “established customer intimacy”.

“Insurers, if they take the opportunity to capitalise on the entrenched position that is there, are much better positioned to go after the reformation but it does have to be coupled with a direct approach that is not going to lead to POC [proof of concept] purgatory as opposed to actual business transformation.”

He said his firm was helping banks “rip out monolithic architecture” because they had spent a lot of money on these types of tech because it was supposed to be easy and simple but in fact it was too simplistic. He likened it to a plumber coming to fix something in your house with just a hammer claiming it would be the only tool they would need to get the job done. “It’s doubtful you’d let them in the door,” he said, but “when someone comes up for a billion dollar IT transformation and says they’ve got a single database with only one data model, you say 'welcome, come on in, let’s get to work!' It boggles the mind.”