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A new era in insurance: Cloud computing changes the game

Technology enables massive savings for traditional suppliers and opportunities for new entrants

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Cloud, mobility, and advanced analytics are transforming the way insurance companies offer value to their customers. As competitive pressures within the industry increase, insurance companies will turn to technology for assistance in this changed environment.

To prosper in this new environment insurance companies can look to the cloud, in conjunction with other technologies, to help drive reinvention of their business model to offer new services and create direct, multi-channel relationships with customers.

Real-time data collection from multiple sources will become core to carriers’ business and a primary source of innovation. Not only will it allow carriers to offer better pricing and better estimate risk but it will serve as the basis for the creation of new services and products by which carriers will reinvent themselves.

Furthermore, with competition increasing from non-traditional players, carriers must move fast. They need the computing power to handle big data. They need to bring services to market quickly and create networks of partners in which the insurance carrier is at the centre of the customer relationship. To achieve these goals, carriers will need different types of cloud services.

Customers will also be encouraged to engage more deeply with their insurance company as the public image of insurance carriers’ shifts. Many of these new services will require direct relationships with loyal customers. That requirement is a trigger for the insurance industry to evolve from a product-centric to a customer centric model. As part of that evolution, carriers are actively trying to change the public’s perception of insurance as a grudge purchase.

Every carrier is trying to figure out how to do a better job of servicing its customers and allowing them to carry out their insurance business on their own terms, anywhere and anytime. To do that, these companies know they must follow in the footsteps of their retail industry colleagues. The multi-channel solutions on the drawing board are invariably cloud solutions. Carriers are starting to design social platforms and communities as vehicles for creating value, segmenting consumers, and gathering ideas from open innovation with the public.

In addition, carriers recognise the opportunity that social media presents to target customers with dedicated offers for insurance. For example if a customer announces travel plans on Facebook or Twitter, an insurer can immediately offer him or her appropriate travel insurance products.

Cloud computing is a model for providing and sourcing information technology services on a “pay-per-use” basis through web-based tools and applications. Cloud services are elastic - allowing them to be highly configurable, adaptable, and scalable - and require less up-front investment and ongoing operating expenditure than traditional IT models.

The shape of insurance clouds to come

Insurance has been a no-growth industry in which companies expand chiefly by gaining market share from a competitor. However, new services and products are proliferating, with little limit in sight other than carriers’ creativity and their ability to forge partnerships. Others have their eyes on these opportunities as well.

The banking industry is seeing threats from non-banking entrants such as telecommunications companies and Google - for example, mobile financial services in developing economies, and applications such as Google Wallet and Google Finance. The same threats have started appearing in the insurance industry. The cloud’s combination of low cost, high scalability, effectively unlimited processing power and storage, and variable pay-per-use cost structures will make it far easier for competitors to challenge the large insurance carriers’ dominance.

Insurance carriers now have the opportunity to change their reputation from bitter-but-necessary medicine to value creator. By reinventing their business model to provide a new set of products and services, fuelled by real-time data flows, carriers can sidestep clear threats on the horizon. At the same time, carriers can regain customers’ trust by putting the customer - end customers as well as enterprise customers - at the centre of their products and services. As cloud computing, mobility, and analytics advances continue, the time to create an executable cloud strategy is now.

Posted by Simon England, Managing Director, Insurance, Accenture UKI and Michael Jackowski, Managing Director for Accenture Software and Accenture Software for P&C insurance

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