Library: Sollers Consulting – The pandemic is pushing insurers to the cloud

March 2021 featured report:

You won’t be surprised to hear that insurance is something of a laggard when it comes to digital transformation.

Clouds are gathering over insurance – but in a good way

We tell you this all the time, but this report from Sollers Consulting focuses specifically on the adoption of cloud capabilities. And things have been slow to change here, too.

A long time coming

A decade ago, insurers were put off using cloud solutions, fearing that networks would be exposed to threats with parlous consequences for data security.

The world of cloud has come a long way since then, and it has been broadly adopted across commerce and government sectors. Cloud is now mainstream and insurers are no longer scared of the technology.

Data from Sollers shows that between 2018 and 2019, insurance CIOs were considering their expansion into infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS) by 50%, 57% and 57% respectively.

The COVID-19 pandemic dramatically altered priorities in IT spend. But despite reducing investment and cutting back recruitment, increasing numbers of insurers are shifting their IT infrastructure to the cloud, says the report’s author.

The pandemic has hastened cloud adoption  

The Sollers report says that around half of P&C insurers have decided to focus on high priority systems investment and accelerating digital and virtual capabilities over the short term.

Lockdown has proven the case for online capabilities and remote interactions for both internal and external business processes.

The Sollers research shows that the three main post-COVID-19 strategic initiatives for P&C insurers were:

• increasing the amount of home working (76%)
• acceleration of the digital transformation project (53%); and
• develop a strategy for cost containment (47%).

All of these can be achieved through the use of cloud services, says the report.

Remote working is driving change

Cloud-based virtual desktop infrastructure allow businesses to take advantage of the flexibility, scalability, and security that cloud technology offers.

This also contributes to considerable savings, with research from IDC suggesting that reduction in costs, improved staff productivity, and general enablement can add up to as much as US $2,015 per user, each year.

Security is helped by rolling out updates and patches centrally, rather than having to support a network of individual devices. Accessibility to these resources can be automated  whether the users are developers, agents, or reinsurers.

In addition, cyber risks and device theft is reduced. There is no physical data and gateways to the central cloud can be protected.

In the case of business continuity, disaster recovery strategies can manage technical issues without fear of losing data.

The first stage of digital transformation

The cloud is where insurers are dipping their toe into the restorative  waters of digital transformation. Machine learning, AI, and analytics. are being delivered by insurtechs that can be integrated into existing cloud solutions.

The report says that insurers are – to greater or lesser extents – adopting cloud initiatives. Property and casualty insurers are more likely to adopt a hybrid approach, and retain central functionalities in-house.

This is a promising development, says the report, but insurers are close to improving security, compliance, and governance through using the cloud

The time to act is now

As cloud is more widely adopted, so the infrastructure becomes more complex, the effort required is greater and the cloud transformation becomes more expensive, says the report.

But that’s no reason to put it off any longer. The report actually says that it’s not too late to start now, but the operative word is ‘now’.

If European insurers haven’t begun their journey on the path to digital transformation, there will be a day – and it could be very soon – that no matter how much progress they make, they will always be playing catchup.

For more, see the full report.

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