December 15, 2021
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Despite the immense benefits of cloud computing, insurers are behind when it comes to digital transformation and cloud computing adoption. Levvel’s 2021 Insurance Consumer Report: A Guide to Growing Digital Demands for Insurance reveals that insurers are behind the curve when it comes to technical maturity, including cloud computing and legacy modernization.
But what factors are driving the industry’s sluggish response to the demands of the modern insurance consumer? Let’s find out.
There are several reasons behind the slow response:
The age of empowered consumers is here. Customers increasingly require personalized experiences, which can largely be delivered through big data and analytics. Although insurers have access to troves of customer data, to analyze and make use of them—and do it quickly—they need a scalable computing infrastructure that many cannot replicate in-house.
Traditional insurers are often saddled with outdated core systems and tech architectures that fail to support critical processes in today’s rapidly changing digital environment. As a result, they have to modernize legacy on-premise systems. This is where cloud computing steps in.
With the cloud, insurers can build pools of structured and unstructured data and connect them to powerful analytics to derive insights and enhance their understanding of their customers. The cloud can also provide 24/7 digital engagement with customers, leveraging technology such as the Internet of Things (IoT) and bots.
With the cloud, data is stored and maintained through an online platform. An external cloud service provider hosts the data in its data centers, where it maintains all hardware, software, and other supporting infrastructure.
A technology that enables data to be pulled from disparate datasets across multiple, segmented systems, the cloud allows insurers to leverage the power of data analytics to the fullest. In this way, it helps deliver superior customer experiences and drives efficiencies across the entire organization—from underwriting and claims to marketing and sales.
Another benefit is scalability. The cloud allows insurers to scale workloads up or down as needed—dramatically increasing flexibility and agility while cutting down overhead costs associated with manually monitoring and scaling resources.
Legacy systems traditionally use on-premise storage. Servers are hosted on-site, within the insurer’s own infrastructure, and users share data between computers through the local network. The in-house IT team controls, manages, and maintains the on-premise infrastructure.
Legacy systems require considerable investments in server hardware, installation, and staff to maintain the systems and implement updates. Speed and agility are not its strengths—it could take months or even longer before the benefits of a technology upgrade materialize, a timeline inconceivable for today’s modern enterprises.
With cloud computing, insurers can roll out virtual data centers within hours and scale them up or down automatically, as needed. These powerful capabilities are just some of the reasons why insurers should place cloud technology at the center of their digital strategy to become digital-first, customer-centric providers.
As insurers work to enhance their offerings and deliver superior experiences across the entire customer journey, the need to consider going cloud-native and embracing the power of the cloud becomes paramount.
Cloud-native digital ecosystems provide integrated user experiences. They connect products from cross-industry providers, offer personalized customer experiences, business agility, and reduced time to market, all at a fraction of the cost of a complete legacy system overhaul.
Although most insurers still have a long way to go, digital transformation is picking up pace within the sector. However, it is not a quick and easy task—the process can be complex and often feels overwhelming. But with insurtechs at their heels, traditional insurance providers must up their digitization game to stay relevant in the modern marketplace.
For more insights on what digitization can do for insurers, read the full 2021 Insurance Consumer Report by Levvel.
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