From benefit enrollment and claims management to deployment of new technologies, cloud-based solutions offer tangible opportunities across the insurance industry.

By now, cloud has been a hot topic in the insurance industry for almost a decade. But while carriers have been relatively cautious about cloud adoption, the conversation has changed in the past few years, moving from “why” to “when and how.”

In this series, I will explore the benefits of cloud in the insurance industry, discuss key trends, and provide a roadmap for insurers’ journey to the cloud. In addition, I will outline essential factors for cloud management.

 

The big opportunities

In today’s insurance industry, cloud can play a pivotal role in driving business value by:

  • Improving speed to market—cloud computing solutions offer insurers greater IT agility and shorter project implementation time.
  • Accelerating business growth—cloud-based insurance solutions can provide better social listening and higher conversion rates from opportunity to sale through targeted campaign management and improved opportunity and lead engagement models.
  • Expanding globally—cloud solutions can help foster a high level of flexibility and standardization across multiple geographies.
  • Innovating effectively—cloud services can help insurance CIOs to quickly deploy and test new technologies, and to collaborate within their ecosystems of alliances and strategic vendors to develop new products and services.
  • Reducing operating costs—cloud-based solutions are considerably less expensive than those deployed on in-house, back-end server systems and can drastically reduce costs for licensing, hardware, and the maintenance of complex legacy systems.

While potential cost savings alone represent a strong argument for cloud, cloud adoption is fast becoming one of the core IT initiatives of the entire insurance industry.

A 2016 study found that:

67% of surveyed CIOs believe that Software as a Service (SaaS) will transform the insurance industry in 5 years or less.1

In view of these real and potential benefits, it is not surprising that cloud is one of the top priority areas for insurers, evolving from a way to reduce IT overhead to a core IT initiative. While cloud-based innovation opens the door for industry start-ups, it also helps large companies expand into new markets more quickly and with less risk.

 

Key areas for cloud

Cloud is supporting and enabling major changes in insurance, from analytics to the Internet of Things (IoT) to the movement to cloud-based infrastructure.

Some of the areas where cloud is likely to make its biggest impact include:

  • Analytics—with an estimated 6 billion high-tech devices now connected to the cloud, insurers have access to vast amounts of information, such as drivers’ driving patterns and risk profiles; cloud analytics tools can also help insurers measure which marketing, advertising and communications campaigns are most effective.
  • Infrastructure—cloud-based infrastructure services can be managed through on-premise and/or hybrid cloud infrastructure, offering flexibility.
  • Hybrid—an increasing number of insurers are combining the advantages of private cloud with the versatility of the public cloud in the form of hybrid cloud environments, which helps them integrate their existing technology and to accelerate innovation.

 

Where we are

Typically, insurers have been more likely to use the public cloud for non-core and support functions, including:

  • Payroll
  • Expense management
  • Human resources
  • Enterprise resource planning (ERP)
  • Backup
  • Service desks

But this is quickly changing.

Take FinanceFox AG in Switzerland, for example. This insurance provider delivers an insurance agency customer relationship management (CRM) application on the Salesforce.com platform, and other horizontal cloud computing applications are being virtualized.2

In addition, insurers are using cloud-hosted applications and pure Software as a Service (SaaS) offerings on vertical use cases such as policy administration, claims management or billing management.

Insurance disrupters, in particular, are taking full advantage of the currently available insurance solutions in the cloud, exploiting cloud’s agility to enter markets with differentiated offerings in a cost-effective manner.

But it’s not just start-ups benefitting from cloud. Larger insurers as well, especially those active in multiple markets, are building their own cloud, with IT departments acting as cloud brokers or setting up hybrids combining public and private clouds. Some insurers have also formed subsidiaries to develop their own cloud-based core insurance applications.

For example, in 2009, insurers Eureko BV and Achmea Holding NV (now Achmea BV) launched InShared, a 100 percent internet insurance company with a 100 percent self-service concept.3 Using the CynoSure digital insurance SaaS platform to drive its business model, InShared had captured 5 percent of the total market for non-life insurance services in the Netherlands after only six years.4

 

Where we’re going

The revolutionary nature of cloud computing is capturing the imaginations of organizations’ CIOs, with its potential to largely reinvent the way the industry does business.

Cloud is making it possible, and will continue to make it possible, for more and more insurers to:

  • Provide a concierge-like service for small businesses with access to quotes, advice and policy management tools online or over the phone.
  • Develop a cloud-based route to market for insurance product creation and lifecycle product management for any class of general insurance business.
  • Allow investors, reinsurers and customers to enter the system as needed.
  • Price the risk for insurance across various age groups and genders, leveraging fitness tracking wearables and mobile apps to gather and collate users’ activity data.
  • Create peer-to-peer insurance focused on renters and homeowners, pursuing a broader regulatory approval strategy.

As you can see, cloud is supporting and enabling major changes in insurance. In my next post, I will give you some specifics around effective cloud management.

Until then, I encourage you to access our Insurance Cloud: From Tactical to Strategic Investment report. You may also be interested in our Technology Vision for Insurance 2018 report.

 

References:

  1. “Driving The Next Generation Of Insurance Through The Cloud,” Digitalist Magazine, November 7, 2016. Access at: http://www.digitalistmag.com/customer-experience/2016/11/07/driving-next-generation-of-insurance-through-cloud-04644090.
  2. “Insurance Brokerage App FinanceFox Raises $5.5M Led By Salesforce Ventures,” TechCrunch.com, January 12, 2016. Access at: https://techcrunch.com/2016/01/12/financefox/.
  3. InShared LinkedIn page. Access at: https://www.linkedin.com/company/575174/.
  4. OutShared web site. Access at: https://www.outshared.com/outshared.

Richard Leroy

Managing Director, Accenture Financial Services Technology Advisory, Cloud Advisory lead Europe

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