In an industry tailored to offer clients security, solidity has taken precedence over lightning-speed innovation in insurance. Until now.
Accustomed to 24/7 access and virtually nonexistent lag times with retailers, banks and online entertainment, customers bring these same expectations to their insurers. Add to the mix self-driving cars, wearables, fintech and advances in analytics capabilities, and insurance companies have the opportunity to reinvent themselves.
As insurers change the way they do business, one common element must exist for successful change: cloud. Cloud underpins all of the digital changes insurers must make to meet their future customer needs and business objectives.
Insurers hesitate to embrace cloud for three main reasons—all fallacies. First, they believe lifting and shifting applications to the cloud does not work. Second, they think sunk costs are unrecoverable. Lastly, they believe digital transformation can happen without cloud.
Lift and shift, in specific instances, can work. For instance, Accenture recently worked with a large multi-national insurance company to help it achieve an 80 percent reduction in the cost of a specific environment of an application suite.
Sunk costs are also not a given. By aligning legacy infrastructure refresh with cloud migration, insurers can avoid unnecessary capital expenditures, minimize write-offs, and sunset depreciation schedules.
New cloud-based competitors are capitalizing so successfully on this underpinning technology that 82 percent of insurance executives agree these competitors are disrupting business. Cloud provides the firepower for analytics that is already turning traditional one-size-fits-all insurance models on their head.
To reap the potential benefits of the cloud, insurers should consider three, key steps:
Insurers should first prioritize and optimize migration to the cloud taking into account key decision factors such as application cloud readiness and digital insurance data needs.
Track value realization over time, especially critical metrics such as claim response times and resource hours saved. Not only will this tracking demonstrate results achieved, it will inform and enhance further moves into the cloud over time.
Beyond cost savings, quantify the return on agility, including incremental revenue realized through faster rollout of cloud-enabled capabilities such as digital usage-based policy features.