We are living in the age of the cloud, and the insurance industry knows this. To accelerate its digital transformation, companies must continue their cloud adoption journey. Being cloud-ready is no longer an option, but a necessity. There is a need for insurers to prioritize and focus on three key trends: elasticity, innovation, and productivity associated with this technological transformation.
Insurers today are facing an uphill battle. For insurers in Asia-Pacific (APAC), the industry is facing an increasingly competitive landscape as modernisation accelerates. This includes digital disruption that is accelerating analytics-driven decision-making and an increase in operational efficiency.
In order to innovate faster and further while staying relevant to customers with highly tailored products, Asian insurers must embrace digitalisation.
Great Eastern, for example, has embraced digitalisation to better reach today’s digital-savvy customers and to support their distributed workforce. The pandemic has reshuffled priorities for insurers, spurring a heavy shift towards digital transformation.
There is a lot of money being left on the table for non-innovators. According to Accenture, the growth gap between insurance leaders and laggards has grown, with estimates of up to US$17 billion being lost over the last 5 years.
However, in the race to increase productivity and client satisfaction, insurers are facing an environment of rising costs thanks to higher inflation.
Harnessing the power of automation, artificial intelligence and data analytics can get costly. To address this challenge, APAC insurers are turning to the cloud to fuel their digital transformation.
Through the cloud, insurers can start to better utilise their data to better understand their customers needs.
This includes collecting, segmenting and analysing data that is used to determine insurance premiums, commission payouts and bad claims rates. The cloud allows insurers to run their data analytics processes at scale, allowing them to drive innovation that puts customers first.
FWD Singapore has a focus that is customer-led, and in order to become an industry leader, they rely on the cloud to innovate faster. The cloud allows them to execute digital technologies that allow a faster time to market, faster customer claims and a smoother process for customers to buy policies.
In a study by McKinsey, the earnings impact of the cloud on the insurance industry will run from US$70 billion to US$110 billion by 2023. This is driven by the ability to drive innovation by unleashing the full potential of advanced analytics, automation and IoT.
Since 2022, inflation has gone up, increasing not just the cost of manpower, but also the operating cost of technologies.
The cloud allows insurers to operate their processes in a scalable and elastic manner without incurring any unnecessary costs that can eat away at the bottom line. Companies will be able to achieve economies of scale at a fraction of the cost, unlike operating data centres that are on-premises.
By reducing vendor lock-in from legacy systems, insurers are able to integrate tools more easily from different suppliers. Zurich Insurance, for example, has shifted operating from traditional data centres to the cloud on Amazon Web Services (AWS). This allowed them to experience a dramatic reduction in the lead time to provision new workloads from a period of weeks to just 48 hours.
To help insurers enjoy cost savings through scalability, T-Systems provides AWS Managed Cloud Services. This allows organisations to deploy their business operations into the cloud, helping to accelerate processes, reduce cost and minimise time to value.
Cloud-based solutions help insurers to harness the power of automation, directing resources away from handling redundant and mundane tasks. This allows organisations to reallocate their resources and workloads towards more productive activities that drive revenue.
In China, the standard for a good digital experience is steep. According to McKinsey, 75% of online customers expect help within 5 minutes of being on a platform.
Utilising the power of the cloud, Ping An Insurance launched a smart credit-based motor insurance claims system where motorists can conduct self-assessment of any vehicle damage. This helps to improve customer experience while bypassing the need to interact with a claims specialist, which will incur additional costs.
The pandemic has taught insurers how important it is to digitalise to better serve customers at scale when there is a sudden influx of prospects looking for coverage. Thai insurers Dhipaya Insurance and Muangthai Insurance utilised the cloud to launch COVID-19 microinsurance products, selling over half a million policies in the first quarter of 2020.
Cloud services allow insurers to use advanced analytics to help better personalise customer interactions. For example, outbound sales calls and upsells will be more targeted and the use of automated chatbots can help to lower the costs per call.
AIA, for example, shifted 70% of its systems and workloads to the cloud by the end of 2021. The transformation to the cloud has allowed for 60% of all customer transactions to be processed without any human intervention. Additionally, 95% of all new insurance policies were issued electronically. This helps to reduce paper trails, use the existing infrastructure more efficiently and cut down on costs.