Discover how the cloud is driving digital transformation in the insurance industry at a new pace in the post-pandemic world. Learn about the benefits of the cloud for insurance and what industry trends are enabling the adoption of the technology at a breakneck speed.
The insurance industry experienced a severe jolt when the COVID-19 pandemic hit. The new world order made it apparent that traditional ways of doing business, especially in fleeting times like these, were as ineffective as they could get. As requests for claims kept ringing and costs started rising exponentially, the need for resource optimization and scalability pinched hard. And so, the idea of shifting to the cloud was given a serious thought.
Today, insurance companies are more aware of the potential of the cloud than ever and have plans to build new business models that can survive an ever-more unpredictable future. The actual transformation of the insurance industry is in momentum, and its future, indisputably, is built on the cloud.
Cloud for insurance: Why is the buzz growing stronger?
To a large extent, cloud technology is acknowledged as one of the most transformational technologies available to businesses today. The statement is undoubtedly true for insurance incumbents. The cloud presents a unique proposition of business scalability at a stretch—and the companies that look through its potential and elevate most of their business operations to the cloud are transitioning themselves into engines of growth.
Interestingly, cloud technology was earlier looked at from a highly rigid infra perspective. For the most part, the C-suite targeted transformation through the cloud for optimizing costs and managing the demand variable. However, a lot has changed as a part of the narrative for good. Insurance companies are dawning into a new era by recognizing the cloud’s umpteen benefits. Leaders are coming to deploy the technology to scale capabilities horizontally and vertically and meet the evolving market needs at speed for 360-degree value generation.
With cloud-based operations, insurers are poised to enhance value chains holistically with the ability to leverage artificial intelligence (AI) and machine learning for proactive outcomes. The cloud is enabling customer data, allowing insurers to dive deep into customers’ preferences, behaviors, and risk levels. AI is simultaneously translating this data into actionable insights to be used across the board, from agents to executives, to make smarter business decisions.
Come to think more of it—with AI and cloud-led pipelines—insurers are fiercely working on channeling automation and accelerating operations intrinsic to their businesses, such as risk and claims management. Cost savings, on the other hand, are significantly doubling up.
Cloud is driving insurers to push the frontiers of service and customer experience innovation. The technology is bringing a fresh approach to how the value chains of insurance companies will work in the future. In the next five minutes of this blog, we will explore why the adoption of the cloud has gained more steam than ever and what trends are acting as a catalyst for it.
Decoding why insurers are losing no time in adopting the cloud technology
Post the COVID-19 pandemic, many insurance companies have come to the terms that it is required to be very digitally influential and also lean on the infrastructure footprints, which need to go hand in hand. Cloud-native solutions help offer the correct balance of scaling up the business and cost optimization simultaneously.
In the build-buy-acquire world, the cloud helps offer the correct scale environment and operate faster. Businesses need agility, which comes from the cloud's different characteristics. Today, companies can make decisions, have the luxury of going wrong, and refine at low costs. Cloud has been the best enabler for the fastest go-to-market, allowing insurers to launch their products in an open environment against the sandbox environment.
Today, the collaboration of the insurance players who have been in the market for substantial years has been increasing with the start-ups, leading to insurers trying to disrupt the value chain by offering high-value solutions for partners and customers. This is where the cloud comes into play, a solid enabler that helps insurance carriers deploy and scale new solutions, both nationally and internationally.
The impact which matters the most for insurance is business agility. A sluggishness was ingrained in every process of the insurance lifecycle, which no longer exists. The cloud has helped eliminate colossal capital investments and a great deal of time in driving updates, new hardware changes, data configurations, and more by bringing scalability, a significant driver of competitiveness in the digital age. Organizations across multiple industries have the freedom to adapt to quick market changes and have higher risk-taking abilities. Insurance companies already entrenched in traditional work methods face issues to react swiftly.
The tailwind of trends: What factors add impetus to cloud adoption in the insurance industry?
The cloud is becoming a key part of the global insurance industry as companies look for ways to reduce costs and increase efficiency. Here are four trends pushing cloud adoption in the global insurance industry and making its transformation significant.
a. Rapid growth of digital ecosystems
The shift in the insurance industry is towards decentralized digital ecosystems that allow for rapid deployment and replacement of solutions as business needs evolve. Underpinning this shift is cloud technology, providing the flexibility and speed necessary to create and sustain a robust digital ecosystem.
Back in the day, implementing updates or maintaining systems was a capital-intensive affair for the insurance industry. The impact of deep-running legacy infra made any reengineering process far more complicated and slow.
With rapid advancements in the cloud, insurers have found room to maneuver, implement, and scale business changes in hours. The technology is supplementing the change by being just the right foundation for allowing business scalability as customers demand more personalization and partners need more points of selling enabled by APIs.
b. Booming partner networks
Many ecosystems and niche partners have entered the insurance space and are becoming a critical way for insurance companies to engage customers across all channels. In order to accommodate the solutions offered by these niche partners in the existing business and go omnichannel, insurers need extensible platforms that provide the flexibility to embed, integrate, and scale capabilities at a pace. In the said scenario, Cloud is emerging as an agent of change and helping organizations bring services as value-addons apace for enhanced engagement.
c. Considerable computing demands of data and analytics
Big data analytics are an indispensable business need in today’s experience-driven economy. Each day, millions of devices generate gazillions of data, and processing such high volumes of data requires intensive computing capacity. This is where the cloud sets out to make a difference.
By allowing the rigor and scale needed to capture, configure, and analyze data, the cloud can help insurers uncover relevant market insights and enable personalization at every customer touchpoint. Insights into customer behavior can help incumbents make better decisions about multiple aspects, including product development, pricing structures, marketing, sales, cross-selling, fraud, and risk mitigation, among many others.
Cloud computing has become a core component in the digital strategies of many major insurers because it widens the capacity to leverage data for crafting meaningful experiences and leading organizations to win in today’s age of relevancy.
d. Skyrocketing customer expectations
Experience is the ultimate deal-maker or deal-breaker for customers. Over 80% of customers say that experience is as important as the services and products a company offers. Provided that, insurers must adopt discerning, customer-centric approaches and shape tailored, relevant experiences to do the winning, more so in times of pandemic when customers are spending more time interacting with technology platforms.
As customers’ choices evolve and turn smarter, a surge in the growth of digital ecosystems, enabled by APIs and microservices, is apparent. The insurance industry needs cloud connectivity to compete.
For insurers, the future is where the cloud is!
The insurance industry and its role for the people are in the midst of a transformation. What was once about calculating premiums and managing costs is now about investment, prevention, and experience. Companies in tow with this transformation are applying data at the heart of all they do, improving experience edge-to-edge. The cloud continues strengthening the shift by paving the path for on-demand business scalability, eliminating resource constraints to enable more sophisticated capabilities, uncovering signals of business change, and capping costs. And so, embracing the cloud for insurers is not a matter of if but when.
Migrating to the cloud may appear a pricey endeavor for insurers, but it will unlock profitable outcomes to take off in the distant future. Organizations with a forward-thinking approach that adopt it early will have a competitive advantage. Those resistant to this change may subsequently be unable to compete on equal terms with their competitors.