Cloud technology offers a saving grace for the insurance industry which has been slow to adapt to change. Insurance is years behind its peers, where legacy systems dominate and old technology systems fail to allow companies to meet customer demand and truly innovate.
At a time where reducing costs is key for insurers, cloud tech offers an opportunity to do just that; to allow insurers to test and learn faster, to provision and decommission technology quickly and cheaply, and allow CIOs to re-focus their time.
Yet even as I write this working from home, fears over the implementation of cloud tech remain. Questions around security, a lack of education amongst CIOs, and some potential regulatory hurdles are proving a sticking point.
From cloud watching to embracing cloud technology
Cloud technology is already changing insurance, as companies provision services at a lower cost and with lower effort. Working with technologies built natively on cloud, insurance companies are now able to get products out to market in days rather than months, all while remaining cost effective.
This allows businesses to respond to market demand quickly. Where, for example, they can update policies in response to new regulation without the added costs.
But embracing cloud technology is also about much more than cost reduction.
In the future, where insurance companies are running their organisations powered entirely by cloud technology, they will have a lot more flexibility. It will enable them to provide solutions to customers which truly meet their needs, whilst developing better customer relationships — something that is urgently needed in a world with Covid-19.
Moreover, without the challenge of managing sticky legacy systems, cloud tech frees up time and resources for further innovation. With cloud, insurers can test and learn much faster as they are able to provision and decommission technology quickly — only paying for what they have used. This gets rid of the existing long wait times for provisioning infrastructure.
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How are insurers adopting cloud technology?
Insurers can adopt cloud technology in three different ways. The first, and currently the most infrequent, is for companies to build their own software on cloud technologies. This requires the insurance companies to have software development in-house.
The second is for companies to host applications on cloud infrastructure, swapping the traditional servers they currently have for virtual machines. This would still offer the same level of computing, but without having to maintain buildings full of servers.
The final and easiest way is to replace existing technology with SaaS platforms which are built natively in the cloud. This means insurers are relieved of the responsibility of their infrastructure. With INSTANDA specifically, they will still own and have control of their data without worrying about how big the database is.
Weathering the storm in insurance
Whilst the uptake of cloud technology is increasing, its adoption is far from ubiquitous. There are still a lot of companies pushing to host their technology on premise. So, while the industry has opened up to cloud tech theoretically, they have not opened up in practice.
What hinders us currently? In my experience, whilst CIOs are becoming more aware of the benefits, they remain concerned about data security. Too many key players in security and infrastructure teams still don’t believe cloud technology offers a higher level of security than their own data centres.
This is based on the misconception that if something is in the cloud, it is publicly available to absolutely everyone.
So how do we overcome this? The question leaders need to ask themselves is: Do you believe that your infrastructure team of six people on a limited budget will have better security protocols than the global Microsoft/Amazon/Google team with billions to spend solely on the area of security?
My inclination would be no.
But more education is required in the industry for people to understand what cloud computing really is, and that it’s not putting your data out in the public domain. Tech leaders need to listen to the security experts when it comes to security. That is, adopt the best principles when maintaining your cloud environment and work in line with ISO 270001 security standards.
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So how do we move cloud transformation in insurance forward?
We can start by pulling talent in from other industries which have adopted cloud more openly. Too often within insurance when we hire technical experts we still require “x number of years experience in insurance.” But hiring from outside the industry will allow for the cross-fertilisation we desperately need.
The companies that openly adopt cloud technologies over the next few years will start to reap the benefits in many ways. It’s not simply about reducing the cost of infrastructure, it’s about enabling organisations to address issues in the industry, at speed.
