3 ways the cloud boosts insurance digitalization
Digital transformation has become the ultimate goal of modern insurance companies seeking to improve customer experience and to derive workflow efficiencies. Becoming a digital insurer means excelling in two distinct areas: optimizing products to better incorporate technology and data, and adopting an organizational mindset that embraces change. The need to upgrade software quickly and constantly reinvent products has become the new normal.
Digital initiatives are all different but their success is rooted in the same concepts of flexibility, simplicity, speed, and security. That is why insurers cannot gain the most from their digital strategies without leveraging the cloud. Cloud adoption has more than tripled over the last three years for insurance carriers, primarily because it is the true digital facilitator. It enables companies to react quickly and focus on their core business as opposed than the underlying technology.
Need for Improved Resource Optimization
Insurers can successfully host digital initiatives exclusively on-premise, but it’s far from ideal. Insurers need a more agile approach than they did previously because the time expectations with regards to product delivery cycles are accelerating as a result of rapid technological advancements and heightened customer expectations. Insurers must expedite product changes based on user feedback, and incorporate the latest tools to remain competitive amidst new entrants and data savvy incumbents. Only the cloud offers the level of efficiency required to meet these demands, especially when compared to on-premise IT, which is often tied to costly infrastructure procurement, elongated provisioning windows, as well as extensive support and maintenance that inhibits scale. The cloud offers on-demand resources, which allow companies to quickly scale up or down based on their needs, and most importantly leave the hassle of managing infrastructure to the cloud service provider.
Similarly, this is true for human resource optimization. IT teams are tasked with supporting on-premise systems, but as change becomes more commonplace the need to scale staff is also a concern. Depending on insurer size and product suite, the insurers could be running between ten and a thousand applications in-house. Leveraging the cloud enables application support teams the ability to rapidly respond to shifting utilization in a cost-effective manner. This freedom from infrastructure management allows insurers to focus on their products and less on the technology that underpins it. This isn’t to say on-premise infrastructure must be replaced completely as there are many examples of hybrid cloud deployments that help optimize resources in an effective manner that brings value to insurers.
Security must keep pace with an agile approach to product development
As insurers adopt more agile software development processes, a “security by design” approach is essential. This means that software engineers are developing security features in tandem with product development to reduce human errors and vulnerabilities while making security more user-friendly. Despite insurers feeling that security is the biggest concern in relation to cloud adoption, it can also be the most effective way to protect products that must change at such a rapid pace. As on-premise systems grow, addressing growing security needs can be taxing for internal IT. Security must play an active role in the software development process as opposed to a stagnant “set it and forget it” approach.
The insurance industry is becoming decisively data-driven, and this momentum is only set to grow as insurers leverage new data sources to drive business decisions. Securing data at rest, in transit and across multiple systems is challenging and requires a dedicated team whose sole purpose is to research, monitor and implement new security tools and strategies in relation to the evolving threat landscape. SaaS providers include security services as part of their standard service levels and are proactive with regards to supporting the latest security requirements. They also employ experts to continuously monitor their environments and identify potential data leakage from logging and monitoring services, backups, and decommissioned applications. Data breaches can occur because sensitive data was insecurely stored within legacy applications, effectively in the insurer’s blind spot.
Cloud models have proven more resilient than on-premise systems
Cloud deployments can be considered more complex and expensive than their on-premise counterparts due to the potential for varying monthly fees tie directly to consumption, and the need to architect specialized redundancy models designed for the cloud. Intra-site redundancy and cross-region disaster recovery models provide for redundant environments, which prevent data loss and or downtime in the event of a server or cloud failure. However, redundancy costs with respect to on-premise are often overlooked because an insurer may already have infrastructure being leveraged for other purposes that it used to create and support its own redundant capabilities.
The public cloud provides more choices and options for disaster recovery then operating on-premise, and as a result, can be better equipped to keep operations available and running efficiently at all times. Azure and AWS, for example, operate in multiple regions and often have multiple availability zones which clients can leverage within each one. Should a major power outage occur on the west coast, an east coast based disaster recovery environment can take over and decrease the likelihood of end-user impacts.
Apart from these reasons that demonstrate how cloud is the true enabler of digital transformation for insurers, there are also many other cutting-edge uses of cloud computing on the horizon to help carriers run their businesses in a more agile manner. Today’s digital insurer must be built for growth and prepared for change to be ready for tomorrow’s set of technologies that will become a battleground for competition.