Cloud computing

What’s Driving Us To the Cloud: Factors Influencing Property & Casualty Insurers to Migrate

June 28, 2017

Technology is at it again. Right now it’s in the process of disrupting your colleagues in the property and casualty market to the point where they’ve been migrating their in-house business functions to the cloud.

They’re in good company; Forrester says the market for cloud computing around the globe is increasing by 34.9% annually with no end in sight. In the insurance sector, property and casualty agencies are joining in with the rest of the world, as they take advantage of the benefits that come with cloud computing. You can get helpful information about managed IT services when you:

Let’s look more closely at the specific industry trends that are forcing the small to mid-size agency to change their basic business processes as they migrate workflows to the cloud.

Industry Trends Spawning Cloud Migration

First, some backstory: for those of you unfamiliar with the cloud, we’re talking about the Internet. Instead of accessing software or hardware installed locally in your office, cloud computing models require your agency to dial through the Internet to connect to a remote server that houses the technology you use to do business. These are web-based services that can include:

  • Software such as Microsoft Office Live or Salesforce;
  • Platforms like Microsoft Windows Azure or Force;
  • Infrastructure like GoGrid or Rackspace Cloud;
  • Or business processes like PayPal.

It’s likely that your property and casualty business already has some functions in the cloud, but industry pressures are driving a lot of small to mid-sized agencies to consider moving more functions into the virtual space.

There are four trends to consider:

  • Increased costs
    Sustaining profits in our industry is increasingly challenging as premiums and investments are decreasing. Competitive pressures are also accelerating, requiring P&C insurers to enact cost-effective infrastructure changes that impact our business.
  • The need to stay agile
    Our global focus on digital connectivity is forcing even the most conservative industries to adopt cloud models that improve access to the tools that customers demand.
  • The need to work faster
    Cloud computing models are deployed much more quickly than on-premise hardware solutions. Go to market time is increasingly shortened for new products and services in order to stay competitive in a global and digital marketplace.
  • The desire for expanded markets
    The property and casualty segment of the insurance industry are seeking ways to expand their global markets in order to diversify their pool of qualified clients. The cloud is the great equalizer; virtual environments know no geographic border and thus are very effective within a global framework.

These are a few of the trends driving cloud adoption. You can subscribe to the TOSS C3 blog to keep up with trends and news related to using the cloud. But what are the benefits that make cloud computing models so attractive to begin with?

Benefits of Cloud migration

There are many benefits to cloud computing models for the insurance industry, no matter the size of your agency. Here are some of the top strategic benefits to consider:

  • Reduces your agency overhead
    Outsourcing your data storage or network security to a cloud vendor reduces the need for an internal or on-call IT team and reduces the complexities of running your business. Cloud solutions are a subscription model, so you never have the up-front costs associated with an on-premise server rack. Are you concerned about security?  Buy the book ‘Easy Prey: How to Protect Your Business From Data Breach, Cybercrime and Employee Fraud’ to learn about ways to keep your business safe.
  • Scalable resources
    It’s simple to add more user licenses, data storage or other system resources in the cloud. You can also scale back these services just as fast.
  • Better collaboration
    Cloud computing models work on standardized platforms, which allows underwriters, brokers, and agents to collaborate and access real-time data simultaneously.
  • Improving implementation time
    In some markets, the competition is so intense that the business that rolls out the service first wins. Cloud technology increases the speed in which we go to market.

While these are some of the key benefits of cloud computing, there are also potential drawbacks; but from the statistics, these are not enough of a deterrent for the small to mid-size agency to lessen their embrace of the cloud.

One of the drawbacks to consider could be compliance, depending upon requirements from local regulators. This could encompass data privacy and security concerns in the cloud. Another challenge could be the integration between your internal IT platforms and cloud technology.

While cloud adoption is certainly increasing in the P&C industry, ultimately you must decide what mix of on-premise and cloud models your agency will embrace. Adopting a technology stack that includes a hybrid mix of models or embracing the cloud with all functions depends upon your strategy and goals. Weighing the risks and gains from cloud delivery models will help your property and casualty agency continue to stay competitive in an evolving marketplace. Find out more about cloud adoption for your business: Get a free assessment today.

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