Other parts of this series:
We’re not just talking about it anymore—it’s time for insurers to be proactive in their journey to cloud
Cloud adoption is on the rise for insurers. It’s not enough to talk about it anymore—insurers the world over are starting to recognize that cloud is not just about IT infrastructure; it’s about using the latest technologies to solve real business problems. In the past, we’ve seen insurers use cloud solutions mainly for non-core business functions, but this is rapidly changing as they discover the legion benefits of cloud.
In this blog series, we’ll take the cloud conversation one step further by looking at how cloud is disrupting the insurance industry worldwide and the value it can bring to your business.
Cloud is all around us
Independent analyst firm Ovum recently conducted a study among 400 senior chief information officers (CIOs) in the insurance industry, which revealed that 67 percent believe that software as a service (SaaS) will completely transform the insurance industry in five years or less—while 20 percent believe it will happen in less than two years. The same study showed that cloud is the third-highest priority area for technology investment for nearly one in four of the insurers surveyed.
They are not wrong.
Insurtech disruption is shaking up the insurance industry throughout the value chain and on a global scale. Companies like Alibaba, Discovery Vitality, Lemonade and others are forever changing the business of insurance—leveraging the power of cloud, big data, the Internet of Things (IoT), mobile technology, artificial intelligence (AI), social networks and blockchain to create new digital platforms and business models.
It’s adding immeasurable value to insurers
As we see this change in the industry, we’re becoming more aware of not only the front-end value of cloud but the back-end value as well.
At the front-end, we now know that cloud enables digital business models as well as business agility through speed to market, flexibility and a more customer-focused approach. At the back-end, it enhances IT efficiency with systems that are highly automated, events-driven and can be released more rapidly.
But, change is hard
Gartner’s digital insurance maturity assessment shows that 74 percent of respondents believe that fewer than 10 percent of all transactions in their application landscape are actually cloud-based.
Insurers face immense risk and challenges when it comes to making the move to cloud and adopting a cloud-first mindset. Change is not easy. We understand that, and the key for us is: how do we help every client in its cloud journey?
All of our clients have different cloud needs and face different risks in their journey. Many insurers have now successfully deployed cloud solutions for horizontal, non-core processes (for example payroll, expense management, human resources, email, backup, service desk and many more), yet they struggle to use it in vertical core insurance processes (such as policy administration, claims management or billing management). This is largely owing to factors like geographical market differences, risk-averse decision makers in the industry and a lack of vendor readiness and proven deployments.
However you look at it, cloud is the future
Despite the challenges, we believe that cloud-based companies are the future. You only have to look at the Asia-Pacific region to find that this is true. The Chinese insurance market has witnessed strong cloud disruption over the past few years. In 2016, there were 330 million online insurance customers in China, which has urged insurers to enhance their digital capabilities.
Internet companies are rapidly disrupting the industry. Alibaba, a traditional e-commerce company, has partnered with eBaoTech to launch the world’s first internet insurance cloud platform which lets insurers check in like they would at a hotel and access a suite of insurance capabilities. China Pacific Insurance Company—the third largest life insurer in China—has partnered with the internet service provider Baidu to create an online auto insurance business.
In the face of rapid disruption, insurers should no longer be considering whether or not to adopt cloud. The answer is unequivocally “yes!” The “when” and the “how” are questions we will explore shortly.
In my next post, I’ll talk about different cloud options for insurers.