Exploring cloud migration in insurance
KC Sreeram and Sheppard Lyngdoh, VPs at Trianz, discuss the impact of cloud migration on the insurance industry.
The cloud services market was already growing at a steady rate and has now been fast-tracked due to the ongoing pandemic. In the insurance industry, cloud computing’s potential is an especially hot topic. Insurers were initially cautious about moving key business applications and functions to the cloud, but with the rapid acceleration of digital transformation and the arrival of 'insurtechs' who are eating into the market share of insurers, the landscape has changed.
Our data says 70% of insurers realise the urgency and importance of cloud in their analytics, business apps, and infrastructure. The cloud’s scope is not just limited to cloud-based platforms, applications, and business processes, however. It also helps open new avenues for insurers to:
- Create and deliver products and services
- Interact with customers
- Collaborate with partners
- Assess and manage risk
- Generate revenue
The value of the cloud also offers major opportunities for insurers to build a more flexible and customer-centric business model that can drive profitable growth. In short, it helps them compete with legacy insurance companies racing to the future, and disruptors like insurtechs.
Cloud Migration Challenges for Insurers
Our data suggests that 13% of insurers are planning to migrate their customer service apps to the cloud, while over 20% are planning to invest in CRM apps over the next two years. Here are some other revealing findings from our extensive study on digital transformations:
- 58% of insurers plan to migrate more than 50% of CRM apps to the cloud
- 41% plan to migrate ERP to the cloud to reduce cost and improve data security
- Only 16% of insurers are planning to migrate more than 50% of analytics apps to the cloud
Some of this sounds promising. Still, there are challenges that legacy insurers must overcome to compete head-on with insurtechs and other global market drivers. In our interactions with insurers, we’ve found that 38% are still using dated mainframes, legacy development environments, languages, techniques, vendors, etc. And a majority of them are still saddled with virtualized, on-prem infrastructure.
Core system functionality has always been a primary concern for insurers when moving to the cloud; however, they can consider a 'cloud-enabled' approach to migrating key applications. Only 59% have migrated their infrastructure to the cloud, while 34% use hybrid cloud computing services. Working with multiple vendors, insurers can confidently migrate to the cloud while maintaining the effectiveness of their core systems.
Besides the legacy infrastructure, there’s still the challenge of enhancing traditional governance processes by building a well-structured cloud service assessment from the ground up to demonstrate regulatory compliance when moving to the cloud. Governance and risk controls (GRC) almost always pose a challenge.
There are other challenges, such as financial costs, rewriting application architecture for the cloud, latency and downtime issues, interoperability, dependencies on non-cloud apps, and bandwidth costs. Even if insurers overcome some or most of these obstacles, there’s still the issue of investing in the people and tools needed to migrate successfully, and training users on the new systems.
How to Get Started
The most common mistake insurers have committed is assuming they need to go all-in on a cloud migration. But many companies are learning they can still be successful with an incremental approach. The most important thing to do before doing anything is to get a clear-cut cloud strategy and roadmap in place.
In one recent Trianz engagement, a large reinsurance company was struggling with inconsistent data insights and an analytics process that was not scalable. They and their clients were frustrated with the legacy system’s poor functionality and outputs; many companies currently working with on-prem data can relate.
The answer was a data lakes-enabled solution that moved the necessary data through an accelerated extract, transform, and load operation. Addressing this issue directly and in isolation allowed for a quickly executed, incremental, and scalable solution to get data insights the company (and their clients) needs now and in the future.
Here’s a checklist of the major areas you must consider and address to maximize your chances of successful cloud migration:
- Assessment to choose your level of cloud integration – lift and shift or deep cloud integration?
- Public, private, hybrid, or multi-cloud?
- Cloud tools and KPIs
- Cloud service providers
- Governance and security considerations
- Cloud migration strategy and roadmap
What does the future hold for insurers?
In a few years, the cloud will simply become the way things are done. Insurers who move more quickly to embrace it will gain a competitive edge that others may struggle to match. Different insurers see different benefits from the cloud, with cost savings being the most common advantage.
The cloud can help insurers accelerate the process of bringing new products and services to the market. It can also help integrate mergers and acquisitions, improve reliability, and enable better customer service.
This article was contributed by KC Sreeram, Vice President of Infrastructure Services and Sheppard Lyngdoh, Vice President of Client Success, both at Trianz.
SLK Software: Optimising performance in the digital economy
Established in 2000 in Bengaluru, India, SLK Software recognises that fast-paced digital transformation is creating an unprecedentedly fertile period of opportunity for global businesses.
As such, with a firm belief in the power of simplification and automation to yield new and exciting experiences, the company has been challenging the status quo for over 20 years through an approach that is:
- Relationship oriented
- Strategically focused on a desired outcome
- Reliant on automation tech
Believing in purposeful automation
SLK’s specialisation in automation tech is full spectrum: artificial intelligence (AI) and machine learning (ML), Computer Vision, Natural Language Processing (NLP), Robotic Process Automation (RPA), and more, are all part of its core competencies.
Citing 90% productivity improvements, 30% business growth through better customer experiences, and up to 20x faster go-to-market capabilities, the reasons for its focus are clear.
The company currently serves the banking, financial services, insurance, retirement services, M&A, manufacturing, and supply chain sectors. Solutions offered include:
- Intelligent Business Transformation
- Agile IT Automation
Accelerating workflow processes
The latter is a tool specifically calibrated to enable business users an easy method for capturing document processes. This can occur across any application, with these individual tasks then seamlessly combined for both improved compliance and governance.
Carol Castelloni, VP of Transformation at CNA Insurance, highlighted this as providing critical support in helping the company meet its business objectives:
“SLK’s Avo Discover tool accelerates how we can document workflow processes, measure impacts on enhancements, and identifies future automation opportunities.” Liberated from having to focus on these process-driven aspects of business, CNA Insurance has been able to refocus its attention on creative problem-solving instead.
Ultimately, this is the most important benefit that SLK brings: it optimises the back end so that clients can channel their energy towards what matters the most, customers.
Read more about SLK Software and CNA Insurance in the June 2021 edition of FinTech Magazine.
Pictured: SLK Software team (source)