Leaping to The Cloud: How Insurers Can Guarantee Successful Cloud Migration
- Baldeepp Singh Chowdhary, Assistant Vice President at Hexaware Technologies
- 19.04.2024 12:45 pm #cloud #insurtech
With many industries already reaping the rewards of the cloud, the insurance industry is now transitioning from traditional legacy systems. Although financial services and insurance industries are understandably slower to adopt newer technologies than other sectors, research shows that more than nine in ten insurers have now initiated their cloud journey, jumping from just 37% in 2020.
The shift from traditional on-premises infrastructures to cloud-based environments is more than a passing trend. It represents a strategic evolution for insurers, necessary to remain competitive and relevant in a swiftly advancing digital landscape. Many insurance companies have realised that legacy systems, built on networks of siloed data and over-complicated processes, are becoming obsolete. Instead, growing customer and business expectations in our increasingly digitised world are driving the need for robust cloud environments. As a gateway to customer-centricity, the cloud helps insurers utilise vast data resources to customise experiences, anticipate needs, and foster deeper engagement.
Far from the stability and reliability that legacy systems once prized themselves on, many businesses are now finding that these technologies pose a barrier to innovation. In fact, legacy technology has negatively impacted over two-thirds of the insurance industry despite new automation and agility in the market. Insurers risk falling behind by relying on legacy systems that cannot integrate with modern, digital-first solutions. This has led to a situation where market growth is held back due to limited customer experiences, and the hefty maintenance costs of these systems, consuming 70% of the IT budget, leave little room for innovation.
Empowering strategy and operations
It can be difficult to measure the impact of adopting cloud systems, as it goes beyond conventional metrics of efficiency and cost-effectiveness. While many businesses take these measurements as the single-point-of-truth of tech and infrastructure investments, it is challenging to quantify the cloud’s impact in these terms.
However, the benefits of the cloud lie in its scalability, incremental innovation, and flexibility – which make it possible to experiment with new business models without the risk of wasted investments. Furthermore, the cloud makes cutting-edge technology, like advanced analytics, machine learning, and AI, accessible to everyone. These technologies are no longer exclusive to large corporations as they are now available to insurers of all sizes, fostering a more dynamic and competitive market.
Migrating to the cloud also helps bake in resilience across operations, in turn equipping insurers with the necessary tools to withstand disruptions and build more robust customer insights. It also provides businesses with data-driven analytics, enabling the creation of tailored insurance products that align with evolving customer demands.
Tackling the journey to the cloud
As they look to continue the journey to the cloud, insurers need to figure out how to make the move happen in practice – how can they migrate and accelerate the journey? This can be daunting, especially considering they will be moving away from their trusted legacy backbone. But the process can be made easier with the following steps:
- Preparation and precision: Ensure assessment tools are efficient in evaluating and addressing potential risks and set up a clear framework for cloud migration.
- Efficient transformation processes: Migration processes must be as efficient as possible, with a clear strategy for reducing costs and minimising technical debt.
- Stabilisation and support: Businesses need strategies for maintaining momentum without draining resources over the long term and ensuring the reliability of cloud infrastructure.
Given the high stakes, insurers should be looking to draw on the power of automated migration tools and expert partners to accelerate the move and identify any challenges as quickly as possible. Collaborating with businesses that have walked this path many times and harnessing the power of technology can ensure a smooth path.
Gearing up for future success
Insurance companies are at a pivotal juncture where recognising legacy systems as significant barriers to progress is crucial. It’s not solely about embracing new technology but positioning for future success. Cloud environments, with their flexibility, cater to increasing customer expectations and simplify business operations —achievements difficult with legacy systems. As the insurance landscape evolves, so will digital environments, so insurers must be committed to innovation—not only keeping pace but leading the charge.
