December 27, 2018 | Written by: Andre Burke
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Tomorrow’s insurance industry disruptors will marry the strengths of a digital business with the power of endless digital intelligence. They will set their sights on going deeper and wider into their own data as well as third-party data–structured and unstructured, text-based or sensory. They will shorten the cycles between what they can learn from data and what game-changing actions they take. They will create or join ecosystems that provide new or extended benefits to their insureds.
And they will do it all on a cloud.
Our industry is facing a number of challenges at present. We live in a time when empowered customers can easily access information and quickly switch carriers. Margins are flat, fraud is increasing, and the regulatory environment is growing more complex. Within this ever-changing landscape, cloud computing offers a new path for sustainable, efficient and flexible growth for insurers.
Cloud is helping insurers redefine and personalize customer relationships, transform and optimize operations, improve governance and transparency, and expand business agility and capability. Insurers are feeling pressure from competitors, customers and business partners to enhance their digital capabilities, and cloud delivers a shorter path to launching digital initiatives.
Below are a few questions may have around the use of cloud in the insurance industry.
How many insurers are on the cloud?
Industry research firm Novarica estimated that two years ago, only 20% of insurers were using cloud computing anywhere in their technology infrastructure; and in 2018, the estimate is 80% (Novarica Cloud Adoption in Insurance: Trends and Issues, March 2018). The same report revealed that for insurers with some or most of their infrastructure on cloud, roughly 80% had plans to expand their use of cloud.
What are insurers looking for in the cloud?
A survey by IBM’s Institute for Business Value (IBV) reported that leading insurers leverage cloud for:
- Operational innovation:
- Simpler and faster processes drive internal efficiency
- Reduced complexity enables better governance and expanded access to more and new types of data
- IT capacity is better aligned to business volumes
- Revenue model innovation:
- Customer relationships, data and other assets are monetized more readily
- Time-to-market is shrunk
- Business model innovation:
- Third-party services become part of the insurance ecosystem
- New types of business can be pursued
What benefits are insurers seeing?
In Celent’s The New Recipe That Is Changing Insurance, Mike Fitzgerald and Tom Scales reported that cloud improved implementation speed, development cost and runtime cost. They emphasized that businesses need to understand the business value of the building blocks for a new recipe and develop an outline for their transformation. This new recipe must have both technical architecture and implementation methodology to be successful and would include microservices, API integration, cloud migration, agile adoption, and user-centric design.
“The new recipe includes aspects of both technical architecture and implementation methodology. Winners will re-architect into microservices, integrate using APIs, move systems to the cloud, drive agile into organization, and design solutions around the customer. In order to begin, insurers must understand the business value of building blocks of this new recipe and develop an outline for their transformation.”
The consensus is clear, cloud is a part of the winning formula for insurance.
By using a combination of cloud-delivered services, insurers are accelerating time-to-market and providing a differentiated customer experience. Cloud can drive significant value creation and competitive value. So how can IBM help you realize the benefits of the cloud?
–>Learn more about IBM Insurance solutions