Why Does the Insurance Industry Need Middle-Layer Architecture?

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Have you ever used multilingual websites and applications? Companies that would like to provide multilingual and multi-platform experiences to their customers don’t develop separate apps for this purpose. They are just following the middle-layer approach to IT architecture. So, what is it, and why do insurers need it?

Middle-layer architecture explained

The widely recognized client-server architecture is familiar to all. It’s commonly understood that an intermediary element exists between the client and server sides. In many instances, this software framework is composed of intermediary layers, each catering to specific purposes. When these layers can function autonomously, the architecture is referred to by various names like “layered,” “multi-layer,” “middle-layer,” “tiered,” “n-tier,” and similar terms.

Below are the typical layers of multi-layer architecture:

  • The presentation layer displays the content through a graphic user interface. This layer is accessible via laptops, mobile phones, desktops, etc. The element presenting content is a website that can be accessed through a browser, a mobile app, or any other element via which people can communicate with the system.
  • The application layer represents the business logic, which defines the rules according to which the app works. This layer may include several elements functioning as independent layers with similar functionalities.
  • The persistence layer offers database storage and allows the rest of the layers to access the necessary data. Therefore, users have the capability to interact with the database via the user interface, following the business logic defined by the application layer.

How it works?

The essentials of multi-layer architecture define almost all principles of software engineering. So, software architects and business owners consider the development projects regarding server, client, and middle layers. In their turn, development jobs are divided across the teams responsible for each layer. Let’s take a closer look at how n-tier architecture works:

  • It allows flexibility modifying and managing various system components while developing and operating. Scalability is ensured when it is needed.
  • Various components of the layer are interdependent, which allows for easy app deployments.
  • In intricate projects, components can span multiple physical layers, communicating through networks without requiring constant engagement of the entire system from top to bottom.
  • The application (business logic) layer works as a middle layer that guides and channels data flows according to the user’s input.

Advantages of n-tier architecture

One of the key benefits of layered architecture is its ability to simplify IT infrastructure management. Among other advantages, we can distinguish the following:

  • Cloud-based apps are easier and cheaper to develop using this architecture type
  • Legacy systems can be quickly upgraded
  • Customization is easier to do
  • No difficulties in understanding the functionalities of each layer

However, it is essential to remember that layered architecture design and development requires in-depth business analysis, special skills and knowledge, and much time and effort. So, you should carefully choose a software vendor experienced in designing multi-layer architecture.

How are digital transformation and n-tier architecture connected?

The flexibility brought about by multi-layer architecture enhances business values in the digital transformation era. This is particularly important for well-established industries striving to align with customer expectations. Numerous enterprises within these sectors display hesitate to update their applications rooted in outdated frameworks.

Large international insurance companies are among the industries that strive to continuously improve customer experience. Insurers understand that legacy core systems are becoming a challenge for both clients and employees. However, it’s pretty difficult to quit using this software since insurance operations can’t be stopped. To sum it up, among the most frequent hurdles insurers need to overcome are the following:

  1. Outdated systems can’t meet modern customer expectations.
  2. Vertical architecture is difficult to modify into horizontal architecture.
  3. Developing new modules atop outdated systems won’t help—some useful functionalities like CRM or data analytics can’t be implemented without middle layers.

The solution is to develop n-tier architecture on top of the legacy core or from scratch. Here are some tips on building multi-layered architecture:

  • Partition the application into tiers by creating autonomous components, each accountable for specific segments of the business logic.
  • Layers can be located across servers to create a horizontal architecture.
  • Enhance the current core layer by integrating one or more service layers that can collaboratively handle the business logic present in the original core.

Regardless of all the challenges, insurance core systems can be transferred to layered platforms with the help of professional software vendors.

Features to consider for layered platforms in insurance

The project stakeholders and developers should consider the following concerns to implement the required functionalities.

  1. Locations where the company operates
  2. Languages users use
  3. Staff diversity (managers, agents, leadership, etc.)
  4. Data access level
  5. Compliance with laws, regulations, and policies of countries where the company operates
  6. Data security rules and measures
  7. Data analytics and dashboards
  8. Customer experience
  9. Alignment of business processes with CX
  10. Features that will differentiate the company from its competitors

All these aspects should be carefully discussed, discovered, and formalized before developing layers. Their number will depend on the company’s requirements and the readiness to embrace digital transformation. Typically, these layers can be divided into the following areas:

The digital layer is all about user interface and user experience. UX should be considered both for clients and agents. Here, the following features should be developed: web and mobile user interfaces, chatbots if needed, notifications, data collection tools, APIs, CMS and CRM systems, and solutions for customer support and onboarding.

The decoupling layer ensures asynchronous data collection from diverse sources to process and keep it in one centralized place. This area is created according to the event-driven and microservices-based approach to architecture.

The insights layer supports the legacy system’s monolith architecture and provides BI, analytics, data security, and other features.
As you see, modern approaches to legacy insurance systems can be applied to custom solutions and legacy systems, as well.

Conclusion

The tiered structure embodies a contemporary software development methodology for complex, user-friendly systems. Intermediary layers possess the potential to significantly enhance the capabilities of seemingly unmodifiable legacy core platforms, which are widely prevalent in the insurance domain. This intermediate architecture furnishes them with opportunities for digital transformation substantial enough to facilitate a paradigm shift towards a different echelon of service – Insurtech.

Effecting the conversion of a legacy insurance system into an Insurtech platform necessitates a well-rounded development team comprising specialists proficient in the various layers intrinsic to multi-tier architecture. Moreover, practical involvement in executing such a transition holds immense value.

Featured image credit: image via freepik

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