Customers are increasingly expecting round-the-clock access and real-time interactions with virtually every service provider with which they do business and insurance companies are no exception. As the insurance industry transforms itself to meet future customer needs and business objectives in a digital world, one common element for success is the cloud. Yet, many insurance companies hesitate to embrace it.

According to a recent Accenture survey, one in three insurers claim unfavorable total cost of ownership is holding them back from adoption.

Cloud in insurance: Imagined costs vs. potential savings

And more than two-thirds of insurance executives believe that replacing their legacy technology with something new would be too costly.

Cloud in insurance: Imagined costs vs. potential savings

Most leaders in insurance think sunk costs are not recoverable and that lift-and-shift does not work, but we have a case study that proves otherwise. Australia-based multinational Suncorp Insurance shrank its data center space by more than 75 percent and reduced its utility costs while moving to the cloud. Like most financial services companies, Suncorp had grown significantly through mergers and acquisitions, which resulted in it running an unnecessarily complex IT environment. The company’s IT had to support as many as 14 brands in five countries. More than 2,000 applications, with significant redundancies, complicated an already complex and siloed IT architecture.

Accenture worked with Suncorp to help it achieve an 80 percent reduction in the cost of a specific environment of an application suite. The use case was a development testing environment migration of a commercial suite of off-the-shelf actuarial systems to cloud infrastructure.

Cloud in insurance: Imagined costs vs. potential savings

How can other insurers achieve similar cost savings? There are three main steps to consider:

  1. Prioritize and optimize migration to the cloud balancing decision factors like application cloud readiness, demand fluctuation and digital insurance business data needs.
  2. Track value realization, focusing on metrics such as claim response times, ratio of cloud to legacy applications and the number of hours saved. This will help your insurance team validate the business case for cloud, while making future moves into cloud more precise.
  3. Quantify the return on agility beyond cost savings, measuring the additional revenue achieved through faster rollout of new cloud-enabled capabilities to better understand the total value. Suncorp has already rolled out data as a service (DaaS) and is currently exploring architecture as a service (AaaS).

Slow, incremental progress was the norm for the insurance industry until recently. But with rapid technological changes and increased customer expectations, leaders in insurance no longer have the luxury of time. Cloud has the capacity and firepower insurers need to make digital happen – and an 80 percent cost saving requires lightning-speed innovation.

To learn more, register to download the report: Cloud as Rainmaker

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