Guillaume Bonnissent’s insurance technology diary

You’re almost certainly staggering under an enormous debt burden that you’re not even aware of. It’s not on your balance sheet, but it adds, almost invisibly, to your direct costs, creates operational drag, attracts new business risk, and damages your market position.

It’s the tech debt. It’s very difficult to add up, but some clever clogs at Accenture have measured it. They put the annual cost of tech debt for US companies at $2.41trn – more than the GDP of Canada.

Tech debt, simply described, is the difference between the technology you’re using, and the optimal technology you don’t yet have.

Koenraad Schelfaut, a senior managing director at Accenture, wrote about tech debt in a recent article in CIO magazine. The consultant effectively links old tech to the four business challenges mentioned above.

Unfortunately, Shelfaut then reverts to type, suggesting that techies should “foreground the value”, before his otherwise excellent article devolves into a sales pitch for an AI repayment scheme. (Those familiar with Insurance Technology Diary are aware that I believe artificial intelligence to be at once both fantastic and terrible.)

The unfortunate truth is that there is no one-size-fits-all technology panacea for insurance, nor shall there be, because risk is multifaceted. The data you must capture, record and exchange is very different for K&R than for hull, for example.

It’s of course possible to build systems sufficiently flexible for modification to suit any class. They can be linked to a corporate data treasury that provides a single source of truth, and connected between companies to make straight-through processing a reality at last.

For now, though, we’re lumbered with legacy that prevents free data exchange. We’ll keep paying interest on that tech debt for years.

Let me be your debt advisor. Don’t search for a panacea. Instead, pay off your debt a bit at a time. Choose an internal team (say, K&R underwriting), then find a system that works for them. Make sure it comfortably links to other functions like policy admin and exposure management.

When you’ve paid off their bit of the debt, move to another team. The same platform, with modifications, might work, or you may need something different.

As long as it works with any other new systems, you won’t be accruing new tech debt. Instead, your whole enterprise will carry a lighter load.

Guillaume Bonnissent is CEO of Quotech