Cloud computing is the perfect enabler for Insurers to implement the digital version of their company faster and cheaper. Due to the current changes in the market, Insurers need to speed up their digital ambitions and deliver excellent mobile and online self-service functionality to their customers, distribution and service partners
It is “The End of Business as Usual” (Brian Solis), Digital is reshaping the landscape for Insurers fast and most Insurance companies have difficulties to adapt to these changes. Mobile and social media will change sales, distribution and operating models and require the adaptation of new marketing and service strategies and innovative technologies. New technologies and services are available for Insurers to change rapidly and become a full Digital Insurer. Online and mobile applications are delivered fast and cheap, social media are providing all necessary technical integration and services to integrate with the Insurance business, big data analytic tools, services and cloud computing are available to create a digital competitive edge and change the current paradigm.
Digital Insurance ambitions
Every Insurer has a strategy to become a Digital Insurer in the coming years. The result will be different for every Insurance company depending on the internal change capability. A Digital Insurer has digitalized the interaction with customers, distribution and service partners as far as possible using mobile and online applications for new business, policy servicing, renewals, expiries, claims and enquiries. It includes digital and social marketing and big data analytics as well as for example rule-based claims management. The Digital Insurer has fully digitalized the internal processes, internal staff and management have access to online and mobile applications, are able to work from anywhere at any time and use their own devices. These changes will change the operating model from a traditional administrative organization to a sales and service driven organization. More employees will work in the sales, distribution and customer services compared to employees working in the traditional processing and administration departments. The Digital Insurer is able to create competitive products with a fast time to market, excellent services and will operate cheaper than today. The Digital Insurer is available anywhere in the world, anytime and on any device.
The benefits of digitizing the Insurance Company are:
- Ease of doing business
- Mobile and online applications providing new and renewal business functionality including illustrations, quotations and payment.
- Advanced self-service tools for claims notification, endorsements and enquiries.
- Minimized and fully automated underwriting referrals.
- 24×7 availability on any device, anywhere in the world.
- Fast business growth
- Big data availability and analytics.
- Personalized advertisements and offers.
- Daily campaigns and pricing changes.
- Digital cross and up selling.
- Higher retention.
- Reduced operational cost
- Straight through processing.
- Minimized and BPM controlled manual work.
- Paperless organisation.
- Digital integration with service partners.
- Rule-based underwriting for simple mass products.
- Rule-based claims management for simple mass claims.
- Improve service to customers and partners
- All information online and mobile available including advanced call center access.
- Fast claim handling by digitalized notifications and rule-based decision making.
- Claims service personnel “on the road” with mobile devices.
- Up and download functionality.
Cloud computing is distributed computing using the Internet as a real time communication network. Cloud providers offer integrated IT services charged based on usage. Cloud computing is provided by specialized IT service organizations providing public clouds out of data centers around the world. Applications, data storage and databases are provided as “Software as a Service” and are available anywhere, anytime and on any device using the Internet. There are many ways to use cloud solutions (SaaS, PaaS, IaaS) and implement cloud solutions in public, private, hybrid and multiple clouds. In Public clouds, infrastructure, platforms and software are shared with other clients of cloud providers, in private clouds these are only shared internally within the company. Theoretically, big global companies are able to implement a private cloud. However, the risk of failure is high due to internal governance, culture, insufficient knowledge and budget. If companies are not comfortable with a public cloud and want to implement a private cloud, the advice is to outsource the full IT infrastructure including applications to cloud-specialized IT companies and make use of their existing infrastructure in a hybrid cloud.
The Digital Insurer in the cloud
Cloud computing enables a Digital Insurer to implement a full digital service for customers, partners and employees. Cloud computing provides software as a service and infrastructure on demand and connects all sorts of online and mobile applications for doing business with the Insurer anytime, anywhere on any device. Online and mobile applications connected to the integration backbone in the cloud are made available for customers, partners and employees. The back end systems, databases and integration backbone of the Insurer are implemented in the cloud and protected with all necessary security measures and systems to prevent compliance problems. Cloud computing comes with flexible scalability and digital projects may start small and when successful fast and easily grow in bandwidth and storage without any issues with IT delivery times. Digital insurance and cloud computing together will reduce the cost of Operations and IT substantially.
The advantages of cloud computing for the Digital Insurer are:
- 24×7 availability on the Internet.
- Device and location independency.
- Fast time to market.
- Flexible work environment and collaboration possibilities.
- Usage based charging/Pay as you go.
- No initial investment cost, shift from Capex to Opex.
- Automated, flexible self-service scalability.
- Load balancing though globally optimized infrastructure.
- Centralized storage.
- High availability, reliability, disaster recovery and business continuity.
- Outsourced IT maintenance services.
- IT departments able to focus on online and mobile application change management, process & service improvement, analytics, efficiency and agility.
How does it work?
All IT infrastructure, servers and network, are available in the cloud data centers of the IT service provider and connected to the internet. On top of the infrastructure, a secure operating platform is available to deploy the Insurer specific back-end systems. Typical systems deployed in the cloud are:
- Client management.
- Policy management(Life, P&C, Health, Group).
- Claims management.
- Financial management.
- Content management.
- Correspondence (printing) management.
- Business Process Management/Workflow.
- Product development and management.
- Others (HR, Partner management, Projects, Governance, Procurement, etc.).
All systems are connected to an integration system, integrating the back-end systems, connecting transactional and data warehouse/analytics database(s) and providing connectors to online and mobile applications and external gateways. Online and mobile applications will be made available in cloud or mobile app stores. Customers, partners and employees will be able to download all the apps they need on their own devices.
Depending on the centralization strategy of the company and the choice of systems and tools this model can be implemented on department, country, regional or global level providing flexible solutions for local differences in language, currency, products, regulations and market practices.
The urgency of Digital Insurance is more or less adopted in the boardrooms. However, Digital Insurance is not fully adopted by sales & distribution departments, underwriters and operations. A paradigm shift in the insurance industry is necessary to adopt Digital Insurance and cloud computing. Even if the benefits are clear, control, security, compliance, knowledge and internal mindset issues could prevent a fast cloud adoption and delay the implementation of Digital Insurance. This does not only concern the IT departments who are facing a major outsourcing, but also all other departments in the company, for example will actuaries agree to store and run their models in the cloud?
Cloud Computing is safe and should be managed in the same way as IT outsourcing. Cloud providers have heavily invested in external and internal security, business continuity, high availability and performance. IT outsourcing is a common practice for many years and experience is available to ensure robust governance, ownership, business continuity and a smooth migration.
A bigger challenge is to enhance the insurance back-end systems to cloud readiness. In most cases the back-end systems are not integrated and front End systems are built on top of back-end systems without a loosely coupled component based IT architecture. An integration layer and transactional database are the necessary basic components to implement and to integrate with the back-end systems and to provide access to data and functionality for online and mobile applications.
A digital IT strategy will be the basis for the implementation of Digital Insurance and cloud computing. To adopt cloud computing, a good way to start is to move non-mission critical systems to the cloud and get experience with using the cloud. However to speed up the implementation of the Digital Insurer, today’s priority should be the cloud readiness transformation of the mission critical systems and migrate these systems to the cloud. The critical components of cloud readiness are the integration between online and mobile applications and the core systems, and the availability of extensive integrated data of customers, transactions, policies and claims. To implement Digital Insurance in the cloud a project needs to include:
- Definition and scope of services and service levels.
- Cloud architecture.
- Application and integration architecture.
- Security and compliance requirements.
- Cloud governance.
- Cloud provider selection.
- Contract and Service Level Agreement.
- Cloud readiness system and database development.
- Online and mobile applications development.
- Technical migration.
- Digital and cloud transformation.