4 Benefits of Cloud Computing and Managed Services for Insurers
The advantages of the cloud are overwhelming and its usage is becoming widespread. Concerns about cloud security fell to 25 percent in 2017, compared to 29 percent in 2016, according to a RightScale survey.
Reduced Costs for Insurers Through Improved Processes
Insurers are under pressure to cut costs. Cloud computing significantly decreases operating and capital investment costs. It provides greater flexibility in IT function and scale at a lower cost, and in a shorter time frame, than traditional IT systems. Cloud computing enables simplification of architectures and processes, while eliminating inefficiencies across the organization. By using the cloud, IT costs are reduced by:
- Moving labor-intensive processes such as data collection, business analytics, archiving, monitoring, application testing and development to the cloud
- Scaling IT services, such as storage and actuarial computation, keeps processing time to a minimum
- Paying per use for the resources and workloads used
- Eliminating the capital expense of buying hardware and software, and setting up and running on-site data centers, including racks of servers, round-the-clock electricity for power and cooling, and IT experts to manage the infrastructure
Enhanced Elasticity and Scalability
Distribution channel pressures and evolving consumer demands for mass customization and hybrid products mean that the flexibility of insurers to quickly respond to new opportunities or challenges is vital. By using cloud computing:
- Applications such as short-term segmented marketing campaign applications can be designed, developed and deployed within days or even hours, instead of weeks or months
- Insurers can scale-up as their computing needs increase and scale down again as demands decrease, eliminating the need for massive investments in local infrastructure, which are always required on an ongoing basis
- Insurers can move certain workloads to or from the cloud, or to different cloud platforms, whenever necessary or automatically, either for better cost savings or to use new services as they emerge
Improved Customer Engagement
Today’s insured DEMAND better service, more customized offerings and whatever is new in the cybersphere. Using cloud computing enables insurers to focus on and improve the user experience at virtually every touch-point. This results in improved customer engagement via:
- The ability to develop innovative and relevant products and to optimize claims and policy servicing capabilities towards improved customer retention and profitability.
- Access to the cloud from a wide variety of devices, from any location.
- Utilization of analytics capabilities in cloud computing to better understand the enormous amount of extremely valuable exclusive customer information that the insurer already possesses.
Optimized Risk Management and Disaster Recovery
Using cloud computing insurers can help manage risk and fraud, as well as improve and reduce the costs of vital disaster recovery. Cloud computing enables insurers to:
- Make data back-up, disaster recovery and business continuity easier and less expensive, because data can be mirrored at multiple redundant sites on the cloud provider’s network, across multiple regions
- Integrate all risk data, such as risk and control assessments, loss events and key risk indicators within a single environment, enabling insurers’ IT staff to make better decisions about the business risk and the regulatory context of IT breaches
- Measure, aggregate and report risk-based solvency capital to regulators and other key stakeholders in a repeatable, auditable fashion
- Use the cloud’s additional computing power to support more sophisticated risk modeling to improve financial planning, actuarial reserving and risk management activities