Apart from being a year of disruption, uncertainty and loss beyond anticipation, the past year and few months has witnessed several paradigm digital transformations globally. It challenged industries to look beyond traditional methodology and diversify for survival. Cloud technologies and remote work culture became pivotal change-bearers.
While few adopted quickly, few paced slowly. Cloud adoption in the insurance sector has been slow compared to other businesses, mainly due to these reasons:
- Insurance core systems are antique.
- Limitation to change and innovation due to proprietary platforms and patrimony technologies.
- Large-scale outsourcing of technology due to a sole focus on scaling distribution and regulatory compliance.
However, in a pandemic hit world where insurance buyers seek digital-driven options, insurance companies are left with no other choice but to become agile.
According to a recent McKinsey study, approximately 25% of the insurance industry will be computerized by 2025.
Some key trends that will shape the digital movement in the InsureTech industry are:
- Increased consumer demand for cloud-driven solutions and automation.
- Entry of digital moguls such as Amazon, Paytm, etc., in the insurance domain.
- The progressive stance from regulatory authorities.
- Covid-19 pandemic that left insurers unprotected to agile, technology-driven & ultra-modern InsureTechs.
How Can the Insurance Industry Benefit from Cloud computing?
The migration can help insurance companies leverage cloud computing features such as data security, unlimited storage, low maintenance, etc. It also allows customers and brokers to connect and collaborate on the go.
The insurance industry can expect certain benefits in terms of:
- Competitive edge
- Achieve a higher speed to market ratio
- Innovate new products & services
- Easy risk management & enhance efficiency
- Ensure business agility
- Automate process
- Meet regulatory norms
- Easy & increased scalability
- Faster deployment of products
- Simplified data access
- Personalised user experience
- Eliminated IT backlog
What are the best practices to adopt while opting for agile technology?
With changing circumstances, companies have started viewing agile technology adoption as an intelligent choice to enhance IT strategy and market authority. It is also considered as a new market plan to attract new customers and gain a competitive edge.
For insurance companies looking to take the cloud route, it is essential to follow best practices for seamless migration.
Here’s a list of six best practices to follow:
- Evaluation of existing infrastructure to identify integration scope is vital. It can help understand the life expectancy and condition of the cloud application being proposed.
- Streamlining system governance is the key. The system in place must be able to identify stakeholders and allow access accordingly.
- Select an IT partner with the best market reviews, SLA standards, and book extensive demos for all systems.
- Monitor the process closely to ensure fulfilment of long-term and short-term needs. It will also help identify initial issues and related solutions.
- Always define organisational requirements from cloud computing systems along with performance measurement metrics to align business goals.
- Support the change, boost acceptance of new cloud tech, provide training and promote skill development process of stakeholders before complete launch.
What are the strategies to follow for a smoother cloud tech integration?
The below-mentioned strategies can be a life-saviour during cloud integration and migration:
- Assessing Business Requirements: To ease the navigation process and make the most of transformation, it is important to be aware of business needs. Set expectations required to achieve optimal operational efficiency along with addressing pain points.
- Define Ownership: Identify different functions and assign responsibilities to respective teams along with keeping track of stakeholder’s activity and data control.
- Log Security & Compliance Concerns: Data security, privacy regulations, and finance-related compliance are major issues for the insurance industry. It is important to note that the agile technology provider meets all compliance-related concerns. It is also necessary to inform authorities about regulations and changes in place.
Challenges of adopting cloud technology in the insurance sector
Any new technology integrations certainly come with challenges. Several studies report that the industries have witnessed 10 years worth of digital transformation within a year. Digital migration is at its peak, with companies shifting to a remote workforce and agile technology to meet market & consumer needs.
However, it comes with its own set of challenges, especially for the Insurance sector:
- Process Complexity: One of the biggest challenges faced by insurance companies is their obsolete system. Insurance is a domain that is known to work with dated technology and movement to agile increases uncertainty. Complexities related to technical migration, lack of adequate support, and rigid structure are few major problem areas that hinder the entire process.
- Familiarity with Dated Solutions: Retaining customers is vital to insurers, and the company needs to manage some legacy applications to access old information. Maintaining a traditional system along with agile tech is a tedious task.
- Performance Related Concerns: Agile technology is not yet trusted by insurers making it a major concern.
- Change Abhorrence: Distaste to transform traditional government processes is an issue. Decision-makers find it challenging to shift into unfamiliarity.
- Security, Cost & Compliance: Regulations and risk management while using agile technology is an issue. Most of the time, businesses fail to identify overall cost, transition budget, ownership concerns, technical manipulation of the cloud system, downtime, bandwidth expenses, operational issues, etc.
But despite the above-mentioned challenges, cloud will definitely be one of the most sought-after ways for insurance industries to work seamlessly and make a digital presence.
InsureTech, cloud and the road ahead
Bygone are the days when decision-makers ignored digital technology. Now it has become the need of the hour. Cloud computing is the driving force of every business domain, including insurance. It offers flexibility, reachability, higher data management and also helps to keep up with changing consumer base. It can speed up the process of bringing new products and services to market and help with mergers and acquisitions too.
Futuristic organizations are not only adopting cloud technology rapidly but are also working on innovative solutions that can help them accelerate and gain a competitive edge over others.
Disclaimer: The views expressed are the author’s own and APAC News Network is not responsible for any of them.