The insurance industry, following the banking industry, is gradually moving towards its digital transformation. Cloud technology has become one of the key elements of this process. Increasingly, insurance companies are defining ‘cloud strategies’ not just as part of the IT ecosystem, but as an essential aspect of their digital transformation plan, as it has a significant impact on transforming business operations across the insurance sector. This is not surprising, as cloud computing brings with it a number of benefits. Insurance companies can use it to, among other things, increase their innovation, improve cost efficiency, enhance risk management and boost a positive experience for their customers – and this is certainly not a close-ended list.
One of the main benefits of moving to cloud computing for insurance companies is the significant reduction in costs associated with the need to purchase IT and network technology equipment and the need to set up and maintain local data centres. The use of cloud computing is essentially based on a ‘pay-as-you-go’ pricing formula. If the basis for this is a clear model of how the cloud computing provider constructs the service, as is the case with the Polcom cloud, then the insurer can estimate with a high level of accuracy the predictable costs and their possible increase or decrease resulting respectively from an increase or decrease in the demand for cloud computing resources over a given period of time.
Shorter T2M and more efficient data consolidation
The easy availability and highly scalable capacity of the cloud can enable rapid response to customer needs and the expansion of insurance services by companies, which often involves the need to implement, modify or increase the capabilities of the IT systems it uses. This can reduce the time to market for modified or entirely new products and services.
It is also noteworthy that the cloud facilitates data consolidation, which is important in the case of unstructured data that is an everyday reality for the insurance industry. Moreover, the centralisation of distributed data sources helps the use of advanced analytical tools, in which artificial intelligence and machine learning mechanisms are increasingly being harnessed.
Data security in the cloud
Cyber security issues are also significant. Storing data on distributed servers in a cloud environment rather than in a single centralised local data centre significantly improves the risk management and resilience of the IT ecosystem. Naturally, the built-in redundancies in cloud computing prevent data loss and can be used in an insurance company’s business continuity plan. It also gains access to the most advanced cybersecurity protection in the form of dedicated hardware and software tools as well as specialised services such as SOC as a Service provided and guaranteed by the cloud provider.
Optimisation of key processes – increasing operational efficiency
Insurance company can effectively use the cloud environment and cloud-based tools to streamline core insurance systems for insurance risk analysis and estimation, policy administration and claims management. This enables greater data accuracy, faster response times and a smoother flow of information across key business processes, resulting in increased efficiency and productivity across the organisation.
Possible integrations and company development and communication with the market
It is also worth noting that the cloud can have an impact on improving communication with customers and other market players. This is due, among other things, to the fact that various tools for serving customers and their business partners (such as CRM systems, customer care/self-care systems in the form of various types of bots, online sales systems) can be based on the cloud, offering them personalised service and multi-channel access. In this way, migration to the cloud can provide a better service to customers and, at the same time, increase their satisfaction with the use of services thus achieving an improved customer retention rate.
The above outlines just a few of the significant benefits that thoughtful use of cloud technology can bring. It can also support further ‘breakthroughs’ that will affect the insurance industry as a whole. These include, among others, the progressive automation of key processes using artificial intelligence, the introduction of new systems using Low/No-Code technology or the use of specialised systems in the cloud in interaction with the IoT to offer insurance of a preventive nature prior to the occurrence of potential damage instead of traditional loss compensation if it already occurs. It is also worth mentioning that cloud technology can also make it easier for new players such as Insur-Tech to break into the market by offering them easier access to the resources and tools they need to develop and offer their innovative insurance products and services to customers.