SAP’s Toronto Lab Enables a Digital Future for Insurance

SAP’s software solutions have traditionally followed a horizontal strategy by developing products that solve problems across many industries. Most industries, then, have customers, partners, suppliers and processes in place to deliver products to market. What happens, though, when an industry is unique enough that the general solutions don’t perfectly fit? These cases require a vertical strategy: specific solutions for a single industry.

One of SAP’s strategic industries is Insurance and it turns out to be unique enough to require a vertical approach for some of its core processes. Take pricing, for example. In most industries, pricing requires you to know the cost of running your business so that you can apply a margin for profitability. However, insurance is a strange beast and the product is a virtual policy contract where the true cost of production is not known until well after it is sold (if and when a claim is made). This means pricing is predictive and actuaries devise complex algorithms and tables that attempt to predict the eventual claims that will affect profitability. And this, of course, needs to be built into a software system.

SAP acquired Camilion Solutions in 2013 and this team is now based out of the SAP Labs Toronto office. Its core mandate is to help Insurance evolve into a new digital future. The team focuses on two core products – Product Lifecycle Management for Insurance, which helps insurers manage the product lifecycle for their offerings and Underwriting for Insurance, which manages the process of producing, pricing and approving new policies and policy changes. These products combined with other SAP modules focus on managing claims, billing and financial processes form an agile core for insurance companies looking to thrive in a new mobile-first, on-demand digital world.

Here are a few of the recent innovations that the SAP Labs Toronto insurance team have been working on to enable insurance companies for the future:

• Close Customer Collaboration.   Innovation doesn’t happen in isolation, and the best market requirements come directly from customers.  In a typical week it is not unusual to have customer visitors, sometimes large teams, in the Toronto Lab meeting directly with developers and product management. Similarly, members of the insurance team are frequently found at customer locations in Asia, Europe, and North America, establishing relationships, gathering requirements and assisting with go-live projects.  
• New Cloud Business Models.  Insurers that want to expand rapidly across regions have been typically hindered by inflexible IT capabilities, but cloud technologies are set to change this.  The Toronto team is providing software for one of the insurance industry’s first true end-to-end cloud companies – fuelling new global growth through a completely cloud-based IT infrastructure.  The team is working to ensure that this customer can quote and underwrite new policies quickly and easily as the HANA Enterprise Cloud solution is deployed across Asia.
• New Sales Channels. Digital sales channels, either direct-to-customer or through agents and comparison portals – are the near-term future for the insurance industry.  The Toronto team is supporting integration with these technologies, including an SAP Hybris integration in Singapore and a bespoke Life Needs Analysis tablet application for a major life insurer in Taiwan. 
• Broader Financial Services Opportunities.  Combined banking/insurance products “bancassuance” are becoming more common – and the need for a common, flexible platform for digital sales, pricing and underwriting is key for these opportunities.  
• Cross Industry Opportunities. Insurance is a pretty complex use case for product lifecycle management, which has resulted in some very advanced capabilities for the Toronto Lab’s Product Lifecycle Management product.  This has led to some interest from other industries, including a recent implementation with a major provider of industrial automation solutions, who were drawn to the product for its ability to quickly and easily configure questionnaires with pricing logic to help drive their new automated proposal management process.

Far from being the quiet, stable industry of the past, insurance is now innovating at a rapid pace. By working closely with some of the world’s most innovative customers, the SAP Labs Toronto insurance team is working to enable a new digital future for this unique industry.