In fact, technology has greatly transformed insurance and led to what is now known as InsurTech. This refers to the use and application of technology in various insurance operations to improve efficiency.
Global consulting firm, McKinsey, has described InsurTech as the use of technology-driven solutions to force innovation and disruption. There has never been a more important time to embrace technology in insurance than now.
One of the many insurance technology solutions that has particularly been on the rise in recent times is the use of Microservices. Microservices simply refers to several small software components which are designed, developed, and deployed independently. However, while these microservices are deployed individually, they do work together in unison to make a complete software application. Microservices allow developers to focus attention on the different components of a complete application, as opposed to just focusing on the gigantic application at a go.
Previously, applications were built as a monolithic entity where all the features and functionalities were packed into one chunk of software. Microservices are quite the opposite and are built as modular components. Each microservice is focused on a single feature and functionality. These microservices then communicate via APIs or some type of communication protocol such as HTTP or TCP.
Benefits of Microservices in Insurance
It is important to know and understand what microservices are, but how do they benefit businesses? In truth, one reason why microservices have been on the rise is because of their numerous benefits, here are just a few:
- Reduced Complexity: A major benefit is the reduction in complexity in regards building and maintaining software. Innovation often happens with simplicity, so it is important that insurance companies have simple software components that can be built upon if need be.
- Service Autonomy: All the microservices have autonomy and independence all through their lifecycle. These services are also easy to maintain separately. Different microservices can be assigned to different insurance operations. For example, there could be a chatbot microservice, a payment microservice, a reinstatement microservice, a claims microservice, and so on.
- High compatibility with containers and cloud computing: Cloud computing is continuously growing in popularity as many businesses have been moving to the cloud. The best part about microservices is that they are very compatible with cloud computing and containerization, another key technology. This promotes the entire mantra of digital acceleration of the modern age.