Because operating on the cloud promises more efficiency and faster business processes, it’s something many companies are running to.
When you compound the promise of better time and cost efficiency with insurance needs like regulatory changes, in-flux market dynamics, and changing consumer expectations around what their experiences as customers look like with the companies they buy from… it makes operating on the cloud even more desirable. With the cloud, you get agile and adaptive abilities that you just don’t get with legacy technology.
However, there are a number of things to consider before fully plunging into a core digital transformation to operate on the cloud.
Misconceptions & Realities about Insurance Cloud Operations
Just because something is easy to buy doesn’t always mean it’s easy to use.
For example, many cloud providers aren’t as responsive to your team’s internal needs as your own internal IT department would be. Further, true multi-tenancy in insurance is very challenging, because of regulatory, resiliency, and security issues that are almost insurmountable with insurance’s requirements. (Moreover, when a multi-tenant system experiences downtime, it impacts all tenants simultaneously.)
Cost savings in cloud operations often come from reducing labor needs, rather than reducing technology-related costs, which is a common misconception.
Unique Complexities & Risks
One significant reason insurers want to “upgrade” to operate on the cloud is to gain more agility and flexibility.
However, if you’re not careful to have thorough discussions about how system changes are managed with your potential SaaS vendors, you could unintentionally paint yourself into a corner here. When the vendor takes on the operational risk, they have to protect themselves against continuous changes so they can maintain their service agreements.
Making sure insurer and vendor roles are clearly defined is crucial to ensuring you don’t move to the cloud for speed and flexibility, but end up becoming even more constrained than you were before.
Cloud Success Recommendations
The above two sections might have felt like a downer, but the good news is there are ways to be incredibly successful on the cloud. (We just wanted to let you in on some of the potential pitfalls so you don’t fall into them!)
First and foremost, make sure the cloud platform offers robust API integration. With extensive options for solid API connections, both insurers and their customers can interact with the system, without hindering business as usual for anyone. This adaptability can’t be retrofitted after the fact, so this is something to look for from the get-go.
Second, avoid viewing a new platform as a simple, self-managing solution.
Although it’s tempting to believe in the self-sufficiency promoted by SaaS B2B marketing, core systems are a completely different animal.
The new platform you choose should have enough flexibility, APIs, DevOps capabilities, and configuration tooling so that your teams can make needed changes without relying on vendor hand-holding. If the platform or the available ecosystem of connection is too prescriptive here, it only limits your innovation options as the insurance market continues to evolve.
Curious About Updating to the Cloud?
The decision to update to a cloud-based core system isn’t one that’s made overnight — nor should it be.
There’s a lot to consider, and we understand the needs insurers have to carefully consider any potential risk involved in a move like this.
If you’d like to discuss what a move to the cloud would look like for your company, with your unique needs and nuances, book a call with one of our account executives here.
