Moving to the cloud is more about the journey than the destination

Deloitte recently published their 2019 Insurance Outlook, giving insight into what’s ahead and key trends insurance agencies should consider. While the positive economic outlook and a robust 2018 are positive factors influencing the future, it is not all a bed of roses.

Last year was a good year with US P&C carriers continuing to expand their insurable exposure base across both personal and commercial lines. While the report attributes this, at least in part, to faster GDP gains, it also recognizes that they had some luck in that natural disaster losses were “down globally down a third to $17 billion” in the first half of the year.

Reinsurers also saw net premiums increase by a third in the same period. However, the US life insurance and annuity (L&A) business did not fare so well, although the outlook is improving.

Time to Adapt?

One of the most insightful messages is that despite a variety of internal and external pressures, how a company is impacted is guided by the insurer’s own strategy. Carriers must be committed and prepared to adapt quickly to rapidly changing economic, technological and societal factors.

Historically insurers have not been on the forefront of technological innovation, although some smaller upstarts have rapidly grown market share by recognizing the changing needs of the consumer and the importance of customer engagement.

It is hard to overstate the impact, both cultural and economic, of cloud technology. While cloud computing has been around for many years and its adoption rate has been steadily increasing, recently there has been a noticeable shift in business drivers and use cases for taking applications and processes to the cloud.

The initial business drivers for the cloud were the lower upfront costs, elimination of the need to maintain hardware and the fact that solutions were available via a subscription model.

Is Cloud About Cost or Performance?

To state that cloud was cheaper is an oversimplification. The cloud doesn’t necessarily cost less money, rather it cost different money over different timeframes. Cloud offerings shift the emphasis from Capital Expenditure to Operational Expenditure, which better aligns the expense with the value realized.

The value of cloud is not only about replacing an on-premises capability with a cloud-based one, but rather exploiting the power of the cloud to deliver new capabilities that are not possible using conventional on-premises deployments. The ability to rapidly deploy and scale applications in the cloud has significant, quantifiable business value in the insurance sector.

P&C Insurance is based on the principle of making a relatively small investment that will provide a larger return in the event of an unpredictable event. When natural disasters occur, such as Hurricane Florence, the resulting volume of claims can easily overwhelm insurers. No insurer wants to be the subject of a newspaper article, detailing their lack of responsiveness, along with the hardships associated with excessive delays to claims.

In the case of natural disasters, it is possible to configure an infrastructure able to handle a huge increase in workload, although historically this would seem cost prohibitive. The cloud’s ability to rapidly scale means that the insurance carrier’s infrastructure can deliver the required level of performance even under the highest claim volumes associated with natural disasters.

Are Some Clouds Are Better Than Others?

Not all clouds are created equal. Deploying insurance systems on cloud-based virtual hardware does not necessarily provide the capability to scale on demand. Running these systems on an Infrastructure as a Service (IaaS) still requires the reconfiguring of that infrastructure to meet the fluctuating demands.

Whether this is achieved manually or programmatically, this must take place outside the application platform and consequently adds additional cost and potential latency. This approach fails to fully take advantage of the true elasticity of the cloud.

A more enlightened approach is to not merely transplant an application from an on-premises deployment to an IaaS technology stack, but rather re-architect the application for deployment on a cloud platform. This places the control of the application’s scalability within the application, resulting in a lower Total Cost of Ownership (TCO) and the required level of business agility.

Capture Faster, Win Bigger

At Ephesoft, we help insurance companies accelerate digital transformation. Whether it’s P&C claims or life insurance underwriting, these processes are fueled by actionable, structured business information. We convert the data that’s trapped in documents into useful information. It has to be accurate, cost-effective and fast.

Ephesoft Transact accelerates processing so you can move faster. The solution uses supervised machine learning to automatically recognize different document types and layouts, then extract the relevant data from them. Even better, each time a user is required to make a correction, the system becomes smarter, learning new layouts and document types over time.

Unleash the Full Potential of the Cloud

Ephesoft Cloud HyperExtender is a hybrid solution, bridging speed and scalability in the cloud to improve performance. Integrating with a cloud platform provides a secure, hybrid approach for those organizations who want to keep their existing on-premises system but want to tap into the power of the cloud. It also works well for full cloud deployments with a cloud-first approach. Industries like insurance, which have peak, seasonal or fluctuating claim volumes (perhaps from natural disasters, weather, etc.), can benefit from this type of hybrid approach.

Ephesoft Cloud HyperExtender delivers cloud scalability at the time it is most needed. This ensures predictable performance that meets SLAs and regulatory requirements, regardless of the workload. All this is achieved without tying up precious capital and resources.

Next Steps

For more information on how to take claims, billing, customer onboarding or other administrative processes to the cloud, click here for more information or contact us.