While concerns do exist over some areas of the cloud, such as security, the advantages are overwhelming. Surveys have shown a drop in these concerns as use of the cloud becomes more widespread and expertise in all areas is on the rise. Concerns about cloud security fell to 25 percent in 2017 compared to 29 percent in 2016, according to the RightScale survey.
As with all industries, 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
- Using cloud computing services run on a worldwide network of secure data centers, which are regularly upgraded to the latest generation of fast and efficient computing hardware, for reduced network latency and greater economies of scale
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
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. This enables them to better understand customer behavior and deliver personalized marketing campaigns and insurance opportunities relevant to each customer. This alignment of service levels, products and customer interactions allows insurers to make better decisions regarding good and bad risks and predict which clients are likely to move to another insurer and why.
Stay tuned for my next blog post, which will explain an additional two benefits. And if you’d like to learn more, please check out Sapiens’ NEW white paper, How Cloud Computing is Reshaping the Way Insurers Work.