Getting ahead in the cloud
In the mid 20th-century life insurance moved from tabulating to embracing early computer technology - a bold decision to embrace new tools, and pioneer the way forward for other industries. Yet somewhere between then and now our industry got comfortable.
We are again seeing a technological revolution, as the world moves from local server-based computer systems to cloud-based software and storage. This shift has seen customer expectation become significantly more demanding across all businesses and service providers, and to compete, life insurers need to offer more, faster.
Yet so far the insurance industry has been slow and reluctant to adapt to cloud-based computer systems, and the new way of working in the digital age. Life insurance has spent the past 50 years developing the legacy system for insurance modelling and pricing, so it is understandable to ask - why fix what isn’t broken?
Yes it’s true the life insurance pricing status quo is still functioning as it has for the best part of a half century and isn’t broken, but when it comes to fulfilling customer demand it is experiencing a gradual degeneration as cloud-based computer software and systems supersede its abilities on every level.
Life insurance companies are extremely risk averse compared to other industries. The potential benefits need to be substantial for the first to make a move. Cloud-based software offers numerous benefits, and early adopters will have a significant advantage in wooing the consumer. The investment in cloud-based software for pricing life insurance offers immediate savings to a life insurance company, as ongoing spending on maintaining software and servers is eliminated. Fast, purpose-built cloud-based software enables life insurance professionals to work quickly and collaboratively, accessing data from anywhere, anytime.
Thirty-two percent of respondents in a 2016 survey of insurance professionals said legacy systems are slowing their progress. People seeking life insurance cover are becoming more tech savvy, as digital natives come of age, start their families and acquire assets. These customers have grown up shopping around online and making purchasing decisions quickly based on the best value for money.
Working in the cloud enables life insurers to respond quickly to these customers’ needs, and not lag behind the end user’s experience of comparing different insurers and purchasing at the front end.
This blog is part one in a three part series on cloud computing in insurance. The next blog in the series will look at how insurers can best protect their data and business while leveraging the cloud.