Insurers are poised to increasingly embrace the cloud and related technologies in 2019, according to predictions Deloitte makes in a new report.
Deloitte argues that for the insurance industry, an increasing amount of core business functions will move into the cloud over the next 12-18 months as part of carriers’ ongoing and accelerating efforts to modernize their legacy computer systems.
The trend makes sense, Deloitte said, in part because seven out of 10 carriers are already using the cloud in their businesses. Another logical driver: Cloud computing enables cost savings and innovations such as “pay-as-you-consumer contracts.” Cloud benefits such as speed, flexibility and scalability are also key factors likely to fuel the next round of cloud migrations, according to the report.
As Deloitte notes, insurance CIOs are under pressure to bring more digital capabilities to the carriers for whom they work, and they are turning to the cloud as a site on which to develop applications as a faster alternative than adding software on-site. The cloud is a sensible tool through which to install significant new technologies because of this dynamic, the report argues.
“Evolving technologies such as advanced analytics, telematics monitoring via the Internet of Things and cognitive applications generally demand newer technology capabilities that are both quickly scalable and flexible, given the amount of data being generated and the processing power needed to leverage it,” the Deloitte report points out.
Cloud providers are adapting to make this happen, evolving what they can do in order to provide advanced offerings “in partnership with system integrators to create industry-specific solutions,” Deloitte said.
Technology vendors, aware of this dynamic, will likely focus on developing innovative cloud-based options in order to tap into this interest, according to the report. The expectation is that this would push “more insurers to look to the cloud first when replacing on-site legacy systems and adding new functionality such as artificial intelligence,” Deloitte states.
With all of these factors in play, Deloitte said it expects more carriers to shift their core systems capabilities to the cloud “in a bigger way, even as they start opting for a cloud-first strategy for new applications and workloads.”
Carriers will succeed in this task, Deloitte said, by enacting long-term plans and training programs.
“Carriers should develop a multiyear cloud strategy, ideally as part of broader efforts to create the digital insurer of the future,” the report asserted.
The full Deloitte report is: “2019 Insurance Outlook – Growing economy bolsters insurers, but long-term trends may require transformation.”