“Insurance companies are under immense pressure to deliver better customer experiences while reducing costs. To meet these goals, many insurers are looking to adopt microservices.”, observed Bahaa Abdul Hussein.

Microservices are a software architecture that enables applications to be built as a set of small, independent services that can be deployed and scaled independently. This approach contrasts with the more traditional monolithic architecture, in which an application is built as a single, large unit.

Evolution

The deployment of systems has been treated as a single process ever since the earliest days of software development in the 1950s. Later, essential insurance systems penned in modern languages like Java supplanted the venerable COBOL-based mainframe monoliths. These streamlined the maintenance process by consolidating formerly separate systems, such as those for claims, policies, and billing, into a single, unified platform.

Then, best-of-breed solutions emerged, modularizing the insurance lifecycle into distinct products for underwriting, claims, and accounting. These so-called cutting-edge core insurance systems nonetheless included a relational database that was incredibly complicated and created a lot of scalability challenges. They were constructed tightly within each module.

This trend toward less coupling decreased this “one component” into more manageable pieces, often known as microservice architecture. This disproves the common perception that insurance is slow to adopt new technologies.

Reasons

There are several reasons why insurance companies are increasingly turning to microservices.

First, microservices enable insurers to be more agile in their software development. By breaking an application into small, independent services, insurers can change one service without affecting the others. This makes developing and deploying new features and updates easier and faster.

Second, microservices allow for more granular scalability. Because each service can be deployed and scaled independently, insurers can scale up or down individual services as needed without impacting the rest of the application.

Third, microservices improve resilience. If one service goes down, the others can continue to function. This is a significant advantage over monolithic applications, which a single point of failure can bring down.

Fourth, microservices enable insurers to better leverage existing IT investments. By decomposing an application into smaller services, insurers can reuse existing components and avoid developing everything from scratch.

Finally, microservices allow for greater flexibility in how an application is deployed. For example, an insurer may choose to deploy a microservice-based application on-premises, in the cloud, or in a hybrid environment.

Microservices are not without their challenges, of course. They can be more complex to develop and deploy than monolithic applications, and they require careful planning to ensure that services can communicate with each other effectively.

But microservices offer a compelling option for insurance companies looking to improve customer experiences and reduce costs. By migrating to a microservices architecture, insurers can gain the agility, scalability, and resilience they need to compete in today’s market.

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