Other parts of this series:
With dozens of new startups entering the insurance industry every year and changing customer expectations, growth is becoming a challenge for carriers with inflexible legacy infrastructures and for small firms without the appropriate resources to make necessary changes and stay competitive.
Indeed, the 2016 Accenture Technology Strategy Survey found more than half of insurance executives cite current technology processes as impeding business objectives.
Incremental change to traditional technologies will no longer suffice in the rapidly changing digital world. A new cloud model, that is utility-based and offers self-service and transparency, is not only necessary, but also feasible for insurers.
The Accenture survey found that six out of 10 insurance companies replace their current legacy infrastructure every three to six years.
This gives most insurers an opportunity to optimize and align this refresh cycle to cloud migration. This will help insurance companies avoid unnecessary capital expenditures, minimize write-offs, and sunset their depreciation schedules – all helping to maximize their savings.
Moving to a more agile, cloud-based environment will allow flexibility and speed-to-market that traditional infrastructure cannot match. More than two-thirds of insurance executives believe that replacing their legacy technology with something new would be too costly, yet our recent survey found 10 percent of carriers use no legacy technology at all.
We at Accenture expect to see this figure grow, as insurers are forced to compete with nimble cloud-based insurtech entrants. While the savings achieved by replacing legacy infrastructures with cloud-native applications are difficult to match, we see equivalents in some lift-and-shift scenarios, such as migrating development and test environments to workloads.
Insurers also can capitalize on unused data center space by subletting via local, national, and global hosting and cloud companies. This would generate additional revenue through better space utilization, and total cost of ownership savings through reduced energy consumption.
Digital disruption requires nimbleness and flexibility. In order to successfully compete against the new entrants and keep growing, established carriers need to go where the startups are: in the cloud.
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