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Insurance companies heading towards the cloud

Digital networking is one of today’s most powerful trends – for consumers, but above all for businesses. And of course that applies to the insurance industry too. While the fintech scene disrupts the business models of the financial services sector, insurgent insurtechs are bringing new digital ideas to the insurance market. So insurance companies are driving their own digital strategies all the faster. Cloud computing plays an important role as a vital component of a digitisation strategy.

In cloud computing, apps, services and data are no longer installed on a local computer, but are provided as a service, via either a private or a public cloud. Whereas private clouds run over a company’s own servers or data centres, public clouds are hosted by external providers. Users no longer buy IT in the form of software or servers – they simply rent it.

Digitisation strategy: insurers depend on cloud solutions

Cloud-based IT has long been widespread: accounting to Cloud Monitor 2018, a recent study carried out by Bitkom Research on behalf of KPMG, two out of three companies were already using cloud-based computing services in 2017. ‘Cloud computing helps companies of all sizes to overcome the challenges of digitisation. This has become generally recognised’, said Dr Axel Pols, Managing Director of Bitkom Research, as he presented the results of the study at Cebit. According to a 2018 Gartner Study (1), by 2021 about 90% of organizations will use ‘cloud’ services. Furthermore, according to an analysis by Bain and Google (2), the key drives of innovation in insurance industry will rely on Cloud Computing. This means that the majority of insurers have already started to gradually migrate elements of their IT infrastructure and applications to the cloud and now prefer to procure new infrastructure services and applications from the cloud. What insurance companies find particularly interesting is the Internet of services, above all software as a service (SaaS): SaaS licensing models give users access to software via the Internet – they pay a fee to cover use and operation, which in some cases saves on the acquisition and operating expenses.

Cost-effective and able to be planned

Besides flexibility and time to market, economic aspects are factors of crucial importance to the SaaS model. Nowadays, insurers have to constantly adapt their products and services to comply with new regulatory requirements. On top of that, interest rates hardly yield any returns, insurers face more and more cost pressure and competition is becoming tougher. That is why insurers are bound to cut costs! SaaS offerings can help with that, because they have enormous potential, especially in terms of cost reduction and control, productivity, and reaction times. The use of SaaS can substantially reduce the cost of IT. There is no need for expensive purchases and investment in hardware and software.

Savings are only offset by the variable costs for the effective use of services. Usage-based remuneration in the form of, for example, an annual price per policy (PpP) agreement provides a range of advantages for both the SaaS provider and for insurance companies. Costs are only incurred for the contracts that are actually managed in the system. Usage-based (and indirectly profit-sharing) remuneration is an innovative, fair and exceptionally collaborative alternative to the remuneration models that are currently to be found in the market. Additionally, as the fixed costs per contract are known, the SaaS user enjoys outstanding planning reliability over a long period of time. Small and medium-sized insurance companies can profit too as they can participate in complex systems in line with their requirements and without the need for large, risky investments.

And that’s not all: maintenance and administration work is no longer required, which enables companies to focus even more sharply on their core business and services that make them stand out from the competition. Furthermore, SaaS offers great flexibility, since every service can be provided separately and tailored precisely to the client’s requirements.

Data access across all national territory

Looking at customer relationship management (CRM), there is again a clear trend towards cloud computing: According to a study by the analysts at MUUUH! Consulting in 2018, seven out of ten companies currently use CRM solutions in the cloud or plan to do so in the foreseeable future. The advantage is that depending on their access rights, employees, brokers and clients can all retrieve data quickly in the office, on the road or at home – and across all national territory.

Among the most important criteria when deciding for or against cloud solutions are data protection, data security, standardisation and storage location. Because in the financial and insurance industries many countries have strict rules about where customer data can be stored and who can have access to it. So security solutions for the cloud have to meet additional requirements, above and beyond those that apply to conventional solutions. Insurance companies should therefore only choose cloud solutions and software architectures that meet their standards and specifications in terms of security, compliance, risk management and data integration.

Security, flexibility and adjustment to your needs

The Unified Solutions offered by msg life are your entry point to the cloud: These holistic platforms for insurers consistently exploits the advantages of cloud computing and offers the highest quality and security standards at the same time. It is a technologically sophisticated pack of solutions that covers all insurance operations across all business lines and automates all the necessary business processes.

Unified Product Platform (UPP) is an end-to-end solution that helps insurers to improve operation and distribution efficiencies. By enabling fast product and rating configuration, it gives you the power of segmentation and personalized pricing and fast time to market.

Unified Distribution Platform (UDP) is an Insurance Omnichannel platform, pluggable into your IT ecosystems, enabling the digitization of your sales and underwriting processes while integrating with existing IT assets (Front-End, Back-End, CRM …).

Unified Administration Platform (UAP) is the answer to rigid, complex, and outdated systems which slow and paralyses business processes in the insurance industry. This solution covers insurance administration processes for Life, Health and P&C.

msg life Unified Platforms can be run as cloud solutions in a high-performance environment, either as individual elements or as an entire platform covering all the insurance lifecycle, and bring to your Insurance company the huge advantages of Cloud and as a Service solution.

References:

  • (1) Gartner Study: https://siliconangle.com/2018/04/12/public-cloud-services-market-hit-302bn-2021-gartner-says
  • (2) Bain & Google:bain.com/insights/digitalization-in-insurance

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