A Must for the Modern Insurer
“Cloud is the future for insurance. It would be difficult to envision a competitive carrier without a cloud presence even a year or two from now. However, the migration to the cloud requires significant thought, planning, time and resources.” – “How Insurance is Riding the Cloud for Rapid New Growth,” eWeek, March 28, 2019.
Property & Casualty (P&C) insurers aim to gain a competitive advantage and reduce significant amounts of IT spending used to maintain legacy systems, while bringing new products to market faster and more affordably. The obvious approach for those who haven’t already made the jump is a shift to cloud-based software solutions that can leverage on-demand hardware, software and human resources, and even offer pay-as-you-go pricing models.
Even those P&C carriers that have already switched to the cloud should check that they are working with a single software vendor who is offering the whole package. The most effective outcome will result from a comprehensive, fully integrated, cloud-based, software as a service (SaaS) offering.
Back in 2018, Novarica noted that a high percentage of insurers were already using cloud computing.
“The number of insurers using cloud computing has tripled in the last two to three years…from less than 20% to more than 70%. Insurers are seeing significant benefits from using cloud over traditional infrastructures in speed, flexibility, capacity… As with any new beneficial technology, getting the most out of cloud requires careful planning, management and upskilling.” – “70% of Insurers Now Using Cloud Computing, With Additional Growth Planned, Says Novarica,” Novarica, March 26, 2018.
What is stopping the late adopters?
The number one concern seems to be around security, particularly regarding personally identifiable information (PII). This is obviously connected to regulatory punishments that could result from data breaches. Medium-size to larger insurance carriers seem to be more fearful. Smaller providers do not have that luxury, as most can’t resist the cloud’s reduction in overall cost.
Another challenge is the staffing model and the need to support the cloud environment. In the past, DevOps were mature and “cookie-cutter.” Today there is continual change. Applications are built in a way that requires faster deployment, which means more participation on the DevOps side. Microservices, for example, can deploy every hour. This requires in-house personnel with DevOps experience (staffing and knowledge resources). This experience can be developed internally or recruited. An experienced and trusted software vendor with a proven professional services team can definitely help with this endeavor.
My next blog post will look at the cloud’s benefits for P&C providers…