If you ask insurance company CEOs to talk about core competencies of their companies, they’ll typically mention underwriting expertise, claims service, and relationships with agents, brokers, and customers. They might even talk about their actuarial acumen and pricing precision. Chances are they won’t talk about insurance systems, even though companies continue to invest significant time and money into buying, building, installing, and maintaining these systems, while they could be preserving capital resources for investments that add greater value to the business.
Wouldn’t it be nice if insurers had a crystal ball to see into the future? They would know exactly what technology to invest in, when to invest, and how to avoid mistakes that would saddle them with future legacy system challenges. Without the ability to predict the future, the best strategy for insurers might be to future-enable and future-proof their architecture via the Cloud.
Cloud-based core systems are usually fully configured, pre-integrated, and ready to use in a fraction of the time of traditional installation projects, and with a pay-as-you-go pricing model, the cost-to-value argument is an easy on. This affordable model preserves capital for other opportunities, while shifting the risk and responsibility associated with ongoing maintenance and upgrades to the vendor.
Given the current investment in and reliance on technology, there is no better time than now to consider Cloud, SaaS, and new data center models as a modernization strategy. And, for small to mid-size insurers, the benefits of these new software delivery methods levels the technology and competitive playing fields, enabling company agility to quickly respond to new windows of opportunity, niche markets, and achieve heightened levels of customer service.
It will take time for insurers to gain confidence in what SaaS and Cloud offer, but I predict that most every insurer is going to move some portion of their technology operation to a Cloud or SaaS delivery model. Those that get in early have the opportunity to leapfrog the competition, while those that wait on the sidelines may find themselves in competitive catch-up mode in the near future.
About the Author: Anil Annadata is CEO of CodeObjects, a software-as-a-service solutions provider for the property/casualty insurance industry. He can be reached at (408) 480-1206 or [email protected].