Cloud Adoption in Insurance Industry: Why It Is Necessary

While 2020 was not the year that anyone had anticipated, yet it undoubtedly accelerated the pace of digital transformation. It compelled organizations from diverse industries to strongly consider moving to the cloud. And, the insurance business as part of the financial services vertical were no different.

Insurers were initially cautious about moving key businesses to the cloud. But they are now looking at redefining the landscape with collaborations. They are set to capitalize on the surge in insurtech alliances triggered because of the COVID-19 pandemic.

If you are someone who wishes to harness the benefits from cloud adoption for your insurance business while making the transition journey smooth & successful, then this article is for you!

Key Contents

• Why insurance companies are moving to the cloud
• Benefits of cloud adoption in the insurance industry
• Cloud adoption challenges for insurers
• Best Practices for Cloud Migration in Insurance Industry
• Top 3 cloud service providers for insurers
• Steps to seamlessly navigate your cloud migration journey
• Must-have modules in a cloud insurance platform
• Cloud use cases for the insurance industry
• What the future holds for insurers

The cloud has revolutionized the way companies work. Ranging from its on-demand scalability to pay-as-you-use flexibility and centralization to easy access for improved disaster recovery; as it brings vital business benefits for insurers such as:

• Achieve speed-to-market edge
• Launch new products faster
• Improve risk management
• Ensure business agility
• Drive innovation with process automation
• Meeting compliance & sustainability norms

The cloud value proposition has never been more compelling for insurance carriers

• Costs have considerably reduced over the past decade with structural improvements in pricing
• The market for public cloud services has expanded at a CAGR of 30% and is anticipated to grow from $300 billion in 2020 to $411 billion by 2022.
• Service providers are now also co-investing in cloud adoption journeys for committed workload consumption. This is a lucrative enablement lever to leverage.

• Offers a Competitive Edge
  Insurers can integrate multiple products and offerings while catering to the unique needs of their clients in a more connected environment. Cloud-based onboarding systems help automate the enrolment procedure to ensure real-time validation of eligibility and policy pricing, enabling you to personalize the entire policy buying experience.
• Eliminates IT Backlog
  Insurers are faced with a major challenge of replacing their legacy systems and moving all their policyholder data that sits scattered across several platforms. It accelerates digital transformation towards a complete tech-led business foundation. Leveraging the speed and scalability of platforms to escape the need to address this costly and time-consuming slowdown.

• Streamlines System Maintenance
  Insurance is a complex business with sophisticated core systems ranging from underwriting, billing and policy buying support to claims processing, customer service & risk management.
  Migration to the cloud helps streamline system maintenance by automating the processes. This helps insurers keep up with the latest compliance regulations and ensure a seamless customer experience.
• Expand Reach Globally
  Insurers who seek to expand their footprint worldwide can leverage solutions to ensure greater agility and standardization across different geographies.

Cloud migration in insurance helps secure the future of the industry though it is not without challenges. It demands careful planning, substantial time and adequate resources.

Having a technology partner that both understands the complexities of the commercial landscape and has extensive experience in implementing enterprise-grade cloud infrastructure can help you build the right solution for your insurance business.

The most common mistake that companies commit is presuming they should go all-in one adoption. But many insurers have achieved success with an incremental approach. The most vital decision to make before doing anything is to define a clear-cut roadmap.

Rishabh leverages an experienced team and industry-leading infrastructure to tailor quick-to-deploy solutions. Here are some of the important considerations for an insurance agency before moving to the cloud.

• Develop solid collaborative capabilities for better transparency and information sharing now and in the future
• Laying down a transparent governance structure for decision-making and other related important functions
• Establish a comprehensive governance structure that can meet SLAs
• Implement a custom strategy considering the level of standardization and risk involved
• Regular monitoring to track the progress on current and long-term needs & opportunities.
• Define and plot the measurement metrics for how to draw the value along with its business need alignment
• Monitor and manage processes to address existing and long-term business needs and opportunities
• Reinforce the success of cloud offerings with continuous training initiatives and activities
• Appraise IT partners periodically to assess their ability to improve functionality, SLAs, and integrate data across services

Insurers may see the adoption as a daunting process but with a defined roadmap and following the listed 4 key steps the transition would become smoother:

1. Analyzing Requirements and Establishing Clear Objectives 
   Before embarking on a digital transformation, insurers should analyze their business needs and define their expectations in terms of operational efficiency and swift adoption of new cloud technology in insurance.
2. Assign Responsibilities and Define Ownership 
   Cloud adoption in insurance calls for clear ownership and the delegation of key responsibilities to the IT team, third parties and business owners.
3. Meet Security & Compliance Concerns
   Insurers must ensure data security and privacy and take the necessary steps to make regulatory authorities understand that proper protocols are in place.
4. Incorporate KPIs
   Measuring the right performance metrics accurately helps identify and leverage early opportunities and gain momentum as the migration takes hold.

With an experienced technology partner, a proven roadmap, and the right service provider, your organization can solve complex challenges, speed up your digital transformation and uncover new opportunities to reach customers.

Here’s a comprehensive list of modules to include in a comprehensive platform that boosts your productivity, saves time and efficiently caters to your customer needs.

Product Configurator

• Integration with third parties
• Configurable Workflows
• Data capture forms
• Distribution options
• Web Services Mapping

Claims Handling

• Standalone Claim Portal
• Complete lifecycle management
• Support for claims mobile app
• Integrated Reports
• Customizable workflows
• Settlement facilities

Secure Document Management

• GUI blocks editor
• Workflow enabled email engine
• Secure document storage
• Digital signature
• User-based controls

Data Security

• Staff & client user management
• Single sign-on with self-service capabilities
• Multi-factor authentication
• Lightweight directory access protocol
• Ownership & access rights
• Encrypted data at rest

Business Continuity

• Regular backup
• DR checks
• Failover system

Underwriting Tools

Import & Export Capabilities

• Bulk import policies
• Bulk import brokers & agents
• GUI tools
• Self-service mapping

Accounting

• Customizable chart of accounts
• Policy deposits
• Dynamic Reporting
• Ledgers & Trial Balance
• Reversal & refund
• Commission Handling
• Reimbursement of Claims

How Cloud Migration Enabled A Leading Dutch Insurer To Cut Infrastructure Costs By More Than 50%

A health insurance company’s premium calculator attracted at least 12,000 users daily for only two months in a year. This yearly cycle meant unnecessary payments for infrastructure and server capacity that remained unused for the remaining 10 months. The spike in online traffic exerted immense pressure on the digital infrastructure throughout November and December.

Additionally, with more and more policyholders turning to the digital platform, the peak in traffic would only grow.

To cope with this, the company was looking for a more cost-efficient and scalable alternative to hosting. Moving the application to the cloud made sense and it empowered the insurance carrier to:

• Instantly release improvements to its app
• Quickly find and fix problems in app performance
• Exceed customer expectations even with sudden traffic spikes
• Increase savings by more than 50%

By migrating their calculator app to Microsoft Azure, the insurance company unlocked its capability to scale infrastructure on demand and reduced hosting cost. The move was well worth the effort and proved to be highly profitable.

To conclude, a move to the cloud may seem costly for insurers. In the distant future, it will drive the way for businesses. Forward-thinking organizations that will embrace it early will have an added advantage. Those who are reluctant to this change may later struggle to match their competitors.

They must budget for bandwidth, migration, adoption, training, rewriting application architecture to name just a few items. The integration of clouds and legacy infrastructure during a migration phase can be challenging. But in the long run, it would help benefit from reduced IT overhead costs with inoperability and efficiency improvements.

Rishabh Software has extensive experience in implementing solutions for the cloud in the insurance industry that are tailored to meet the industry’s dynamic needs. We can also help you build custom cloud solutions to automate your business operations, enhance customer experience and lower your overheads.

You can count on our experienced team, equipped with a comprehensive technology stack to help you create the best solution for your business. We will work with your team to capitalize on the cloud.