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The cloud is still the top choice among brokerages for software hosting, according to a recent report by Applied Systems on digital adoption among brokers, with 65% of those surveyed in Canada, the US, UK, and Ireland using the technology. Insurance companies are also jumping on board with IBM announcing on July 23 that major provider Economical Insurance will be using IBM solutions to migrate their data and workload to the cloud.
There are a few reasons why the cloud continues to be popular in the insurance industry. For one, hosting software in the cloud is cost-effective since the IT infrastructure is outsourced to a service provider. In the age of innovation, cloud is also the ‘gateway technology’ that allows insurance companies access to other digital solutions.
“The promise of cloud delivers against a number of factors. You get elasticity in the model, which means you have the ability to scale your investment in a more cost-efficient manner much more quickly. More importantly, it is foundational for a lot of these insurers to introduce new functionalities to the marketplace,” said Frank Attaie, vice president of cloud and software at IBM Canada, while adding that consumers expectations for a more digital experience are driving adoption. “In order to take advantage of all those new paradigms – the single view of the customer, predictive analytics, greater customer experience and digital footprint – [for] all of those things, you need a good foundation to build on.”
Canadian enterprises tend to be smaller than those south of the border, explained Attaie, and insurers here tend not be as ‘leading edge’, though it’s becoming clear that in order to compete on a global scale, Canadian companies need to be followers.
“It took a couple of years to manifest, and for the marketplace to wake up and realize that [companies] like Amazon and Google and Facebook – and if you look at places like Asia, Tencent and Alibaba – are rapidly and insatiably expanding into non-traditional marketplaces,” said Attaie. “You go from not being a fast follower to prioritizing based on the concerns that these organizations are seeing in the world.”
The future of cloud usage by insurers is bright, especially as companies like IBM are focused on providing security and data solutions through its platform as well as the ability to launch innovative applications – Economical’s new policy administration system for brokers was born on the IBM cloud, for instance.
“It’s the first foray into cloud that is the big step,” said Attaie. “You’ve got to understand the basic premises, you’ve got to get your head around to a different way of doing business, you’ve got to get the first couple of investments made, and once you’ve done that, now you have the ability to scale your environment.”
