Other parts of this series:
Five reasons why cloud adoption is on the rise for insurers
The concept of cloud computing started in the 1960s, when researchers at MIT developed technology that allowed them to use more than one computer at the same time. This ‘intergalactic computer network’ was the first foray into the cloud, and insurers today are rapidly starting to realize its value and potential. Today, cloud is about so much more than just IT technology. It’s about solving complex business problems with the latest technology.
In this series on cloud, I am going to discuss the benefits of cloud adoption, the journey to the cloud and its new business models, the importance of staying in control during this journey, and finally I will share practical steps to get started.
The real benefits of cloud
There are big opportunities waiting for insurers in the cloud, where they will find insurance-specific applications to help them develop intelligent and cost-effective solutions to their business challenges. In a recent Accenture Consulting study on cloud adoption among insurers in the EU, my colleagues Richard Leroy, Elodie de Fontenay and Kankeyan Murugavel outlined the following key benefits of cloud for insurers:
- Improving speed to market
Cloud-computing solutions specifically tailored to insurance can help insurers achieve greater IT agility and shorter project implementation time. This agility and speed allow insurers to deliver their service offerings much faster than before.
- Innovating effectively
Insurers worldwide are under constant pressure to innovate, to come up with new ideas and to keep up with market disruptors. Insurance CIOs need to make sure that their IT application portfolios can meet the evolving needs of the business. With cloud, insurers can test and deploy new technologies quickly. It also allows them to collaborate within an ecosystem of alliances and strategic vendors to develop new products and services.
- Accelerating business growth
Cloud allows insurers to test new business models and shake off old business models quickly. More than that, it enables quick scaling for successful new business models. At the same time, cloud-based insurance solutions provide better social listening and higher opportunity conversion rates. Simply put, with cloud solutions, insurers can better:
- Figure out what customers need and want;
- Quickly test, develop and scale services to meet customer needs;
- Create targeted marketing campaigns to sell new services to customers;
- Communicate with customers and gain feedback on the new services; and
- If it’s not up to scratch, the insurer can go back to the drawing board quickly and efficiently and restart the process.
- Reduced operating costs
But creating new insurance offerings and taking them to market is expensive, right? Not necessarily. Cloud-based solutions are less expensive than those deployed on in-house, back-end server systems and can reduce costs for licensing, hardware and the maintenance of complex legacy systems. However, I must emphasize that this is not always the case. Cost savings depend on an insurer’s cloud strategy and plan of action—more on that in subsequent posts.
With cloud-based solutions, insurers can automate certain aspects of the job; for example, the enrolment process, claims management, underwriting, and so much more. This frees insurers up to communicate better with customers, deliver a more convenient and personalized way to shop for benefits and to deliver better customer service.
- Expanding globally
Insurers that move to the cloud don’t need a data center, as cloud is a complete service already. Cloud solutions can help those who wish to expand globally to standardize their business across multiple geographies. The high level of flexibility cloud brings to the table can make it easier for insurers to foster international relationships and integrate with other companies if they should wish to do so.
Cloud adoption is on the rise for insurers. A 2016 study of 400 senior CIOs found that 67 percent believed that software as a service (SaaS) would transform the insurance industry in five years or less—with 20 percent of all respondents falling into the ‘two years or less’ category. As we start to catch sight of 2020, we’re seeing this prediction become more of a reality.
Technology enables business growth
To summarize the benefits of cloud-based solutions for insurance companies, one only needs to look to the success of insurtech start-up companies like Lemonade, Trōv, Cover Wallet, Insureon and Fit Sense, among others. These companies have used disruptive technologies like cloud, big data, the Internet of Things, mobile technology, artificial intelligence, and even blockchain to:
- Change the way insurance is bought and used;
- Thereby redefining insurance business models; and
- Creating collateral damage to traditional players.
But technology is an enabler of business growth for companies big and small, and insurers are starting to realize that in a digital world, success comes from being able to experiment, adapt, analyze and collaborate at speed.
Cloud allows them to do that. With the cloud, insurers have the benefit of:
- Speed and agility as the cloud is transforming how insurers use technology to innovate.
- Better integration as companies can use the cloud to scale up rapidly without huge capital investments. Companies should redesign applications with a ‘cloud first’ mindset, meaning that new apps are designed for the cloud.
- Everything as a service as cloud computing becomes the basis for a company’s digital business framework going forward. Companies that see everything as a service, not a product, can change more quickly and make better investment decisions.