Though there are dominant players in the cloud computing space, there are no true monopolies. The expanding number of cloud vendors has created a blizzard of options, compelling insurance companies to sift through PaaS, SaaS, and IaaS choices in search of the perfect fit. The open secret? The market is beyond the point of singular cloud solutions: it’s time to embrace multi-cloud environments.
Some insurance companies have already answered this call for change. Allstate is thinking of their business as cloud native and building their services around cloud tools that promote efficiency, profitability, and customer satisfaction. AIA Group Limited is actively moving all their legacy systems to the cloud, pursuing a digital-customer-centric model that utilizes the right tool for each workflow. Not everyone is doing this yet, but there are enough innovators to move the dial on adoption.
If your organization is hesitant to readjust your cloud strategy to include more multi-cloud options, keep these three considerations in mind. They can help to elevate your ability to respond to insurance industry tech trends and act with intention.
1.) Multi-Cloud Can Be Calibrated to Specific Needs
The cloud market has entered its verticalization phase. Everyone from niche contributors to massive hyperscalers are vying for industry-specific business, resulting in some impressive capabilities. Adding the right tools to your multi-cloud strategy is like trading in your Swiss Army knife for a fully stocked toolbox—the limited flexibility you had is replaced by specific resolutions for your diverse array of challenges.
If you can think of an insurance-related function, there is likely a cloud-computing platform optimized to it, from accounting and claims processing, to customer service and underwriting. For example, solutions like Service Center or Ventiv Claims simplify claims submissions with a user-friendly platform that feels intuitive to industry leaders. That’s just a snapshot of the possibilities.
We’re also seeing cloud solutions that are calibrated to specific functions. Look at Allstate. This almost one-hundred-year-old enterprise has adopted AWS to handle much of their container and development needs, while also exploring BigQuery, Vertex, and Microsoft Azure’s Generative AI capabilities to address their AI workloads. This varied approach is a lesson in how to maximize the power of combined cloud platforms to yield greater performance and reduce risks.
2.) The Right Combination of Cloud Strategies Can Maximize Profits
Often, cloud-based platforms are exclusively discussed in terms of their increased efficiency or risk mitigation. Yet some have the potential to maximize revenue, going further than cost savings, total cost per ownership, or even cost per transaction.
Forging a cloud-based business model is one way insurers can use their cloud decisions as a revenue source. Look no further than Netflix for a true success story. The media subscription made the shift from physical media to a fully streaming service as their business model. Within the insurance sector, we’ve seen companies build revenue streams through on-demand coverage, giving consumers the ability to activate and deactivate policies on a circumstantial basis. As more policyholders seek flexibility from their policies, established insurers will need to embrace the cloud to unlock profit.
Even if insurance companies choose to maintain traditional business models, there are ways to supplement their primary revenue with cloud-based tactics. We can look at organizations within the banking industry for examples. The way some companies are monetizing open banking APIs, offering their existing data and solutions to third-party organizations, is widening sales funnels and adding to their revenue through data brokerage.
Insurers can imbed policy widgets into car retailers’ websites or share data through APIs with select partners. Though some of these services can be provided with on-premises solutions, the scalability and availability necessary for a reliable service is best approached through the cloud. These and other potential moneymakers show how multi-cloud solutions for different applications can make insurers more resilient as they face market uncertainty.
3.) A Multi-Cloud Approach Offers Flexibility and Availability
More than just harnessing the power of various tools, a multi-cloud strategy can enhance the overall reliability of your cloud-based operations.
Let’s start with business continuity. The average consumer will wait less than three seconds for a website to load before taking their business elsewhere. That means, if a consumer visits your website for a renters-insurance quote right in the middle of your sole cloud provider’s outage, you risk losing their business.
What’s worse is that loss is often cascading, especially since consumers expect a seamless customer experience (CX). A five-year McKinsey study found that companies with a robust CX (which would include minimal disruptions or downtime) typically outperformed their peers by 20% among life insurers and 65% among P&C insurers.
Spreading your workloads across the cloud (public, private, or both) mitigates the risk to your revenue or operational functionality when gaps in availability occur, whether through routine maintenance, malicious attacks, or anything in between. Plus, your workloads can more easily scale with ongoing demand, expanding rapidly to maintain a consistent customer experience.
Another way you can increase availability is by customizing where your applications are hosted. An application that consumes significant amounts of bandwidth might be better off secluded on its own hosting platform, separate from other critical programs and systems. This type of division protects all applications involved without risking any workloads in the process.
On a Final Note
Though your organization can benefit from adopting multi-cloud environments, this digital transformation does not come without risks. One is security. By embracing two or more cloud solutions, you are expanding your attack surface. This provides hackers with more opportunities to test the limits of your cybersecurity initiatives in the hopes of finding gaps in your armor. It’s unavoidable but doesn’t need to be detrimental. You can lower your risk by partnering with companies that prioritize security at every level, creating multifactor authentication and implementing a zero trust security model to control access to all systems.
Proper data governance is also a consideration. Traditional permission models have not translated from single to multi-cloud environments, requiring IT leaders to employ fine-grained access control to give each item of data its own access policy. Moreover, each vendor will approach regulatory compliance differently, requiring your team to select cloud solutions based on your compliance posture or collaborate with any potential partner to mitigate risk.
Though both these factors require an investment of time, money, and effort from your tech team, the end result is greater availability, productivity, and security than the insurance industry has experienced before.
Are you ready to explore multi-cloud environments for your organization? Learn how w3r Consulting helps insurance organizations with this and other digital solutions.
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