The global insurance industry has undergone seismic changes in recent years, overcoming hurdles raised by the pandemic. With geopolitical tensions, rising interest rates and loomig recession threats, emerging technologies particularly cloud computing, are reshaping the way insurance companies operate most efficiently.
According to PwC’s 2023 Cloud business survey, 78% of insurance companies have adopted the cloud or moved some part of their business to the cloud resulting in simplifying the dialogue between companies and end consumers,. Cloud-based solutions have swiftly become the bedrock of innovation, offering insurers unprecedented scalability and efficiency with insurance customers seeking support at every touchpoint, from underwriting to policy servicing to claim.
The increasing use of high-quality data, artificial intelligence, data analytics, digital tools and services has made technology a key enabler in addressing the needs of end consumers and enabling the business to address customer needs in the best way. Among these challenges, cloud has become ubiquitous in serving the end consumers and business better, faster and more efficiently while demonstrating the flexibility and agility for technology enablement.
McKinsey research shows that the impact of cloud on the insurance sector EBITDA run-rate will be between $70 billion to $110 billion by 2030. When looking at EBITDA impact as a percentage of 2030 EBITDA, insurance is now the top-ranked of all sectors, at 43–70 %.
The cloud-enabled digitalization
Many insurance companies rely heavily on legacy systems and older technologies leading to a delay in implementing new features and resisting a change that drives up the maintenance costs. The tech wave has given providers a glimpse of what cutting-edge cloud technologies can offer. In this context the role of hyper scalers is becoming increasingly important to adopt cloud faster.
Many of these hyper scalers are increasingly building features, services and capabilities aligned with industries for easy adoption. For instance, HCLTech Amazon Connect migration package for enterprises have helped insurance providers migrate away from Legacy Contact Center to Amazon Connect in a definitive timeline.
An EY survey found that for 61% of respondents, digital transformation is the primary trigger for cloud adoption. Insurance organizations can modernize and optimize their legacy or on-premises infrastructure with cloud adoption, allowing teams to develop intelligent, cost-effective new capabilities and product applications more quickly, resulting in faster time-to-market. Tailored cloud computing solutions can help insurers achieve greater IT agility and shorter implementation time.
According to an Cloud Economics survey, respondents reported a 27.4% average reduction in IT infrastructure cost per user after moving to a hyper scaler like AWS while adopting the out of the box features in enabling the organization demands. Insurance companies can save the hardware and data center costs associated with on-premises IT infrastructures with cloud-based solutions and SaaS platforms. Also, pay-as-you-go pricing brings down initial capital expenditure (CAPEX), while ongoing operating expenditures (OPEX) are easier to manage. The cloud helps automate several routine insurance processes such as customer enrollment, claims management and underwriting, which reduces operational costs even more.
Artificial Intelligence shaping the future of insurance
From distribution and underwriting to claims management, AI-powered text-analytics platforms are digitally transforming and reengineering core insurance processes. AI technology can optimize efficiency and automate workflows by speeding up underwriting processes and extending data informed policies faster, while improving customer service. Process automation, data science and natural language data can streamline and modernize the administrative process and accelerate decision-making.
With modernized AI-solutions, insurance companies can get a 360-degree view of the customers in real-time, which can unify datasets to make insights available to anyone across the claims process or underwriting ecosystem. This transparency provides highly personalized policy recommendations and experience. For instance, artificial intelligence can help detect insurance fraud, reduce claim costs and mine voice data to enhance customer service, while smart and intelligent automation can help automate processes like property assessment, personalized customer interactions, fraud detection and claims processing and verification.
The integration of generative AI in the insurance industry is ushering in a new era of customer-centricity, operational efficiency and improved decision-making, ultimately redefining the insurance experience for both insurers and policyholders alike. The adoption of generative AI models have proven to be invaluable assets, empowering insurers to provide personalized, efficient and round-the-clock customer service. These AI-powered chatbots can handle a wide range of customer inquiries, from policy information and claims assistance to general inquiries, with remarkable accuracy and speed.
Transformative technologies to gain competitive edge
The insurance sector is harnessing the power of various transformative technologies to provide enhanced services to its customers. Big Data Analytics has become an invaluable tool, enabling insurers to extract valuable insights from vast amounts of data. By analyzing customer behavior, market trends, and risk patterns, insurers can make data-driven decisions, improve underwriting accuracy and enhance fraud detection. The Internet of Things (IoT) has also made significant strides in the insurance industry, with connected devices providing real-time data on insured assets, enabling proactive risk management and personalized pricing.
Blockchain technology has revolutionized security and transparency in the sector, facilitating streamlined claims processing, reducing fraud, and enhancing trust between insurers and customers. Machine learning (ML) algorithms have enabled insurers to automate processes, optimize pricing models, and personalize customer experiences. Additionally, customer relationship management (CRM) systems have enabled insurers to manage customer interactions more effectively, providing personalized recommendations, tailored policies and prompt customer support.
Customer experience (CX) is the new buzzword in insurance
Changes in customer expectations have prompted the rise of digital innovation in the insurance industry. Customers today expect digital transactions that cover the same level of real-time insights and interactions that they experience with Uber or Amazon. To cater to these changing expectations, insurers need to rethink their customer acquisition and servicing models to align with evolving customer behavior.
Research shows a superior customer experience drives retention and profitability. In addition, insurance executives believe that rapidly evolving customer needs and expectations will be the top challenge for growth. To continuously generate superior customer experience, insurers need to address customer pain points. Thanks to social media, one instance of poor customer service or a badly handled claim can now result in brand damage and customers shifting to another insurer.
Artificial intelligence, machine learning and digital analytics provide customer insights to develop a data-driven customer strategy by prioritizing an individual’s unique characteristics and enabling personalization. Customer analytics is a strong tool to wow and simplify the process and service cycle seamlessly. With technology as an accelerator, insurance companies can deliver on customer centricity by providing continuous support to customers at every touchpoint – from underwriting to claims -- to live up to the brand promise.
Cloud: The catalyst for innovation
HCLTech Insurance Cloud on AWS
In this era of digital adoption, customer expectations of hyper-personalized services have risen to new heights. New business models are democratizing innovation in the insurance industry and insurtechs are upending yesterday’s success strategies with value added services that are disrupting businesses across the insurance value chain.
HCLTech's insurance cloud solution on AWS is a fully managed and regulatory compliant solution that offers flexible options for policy administration and servicing operations. This solution not only transform insurance company's operations but also enables them to achieve new levels of innovation, accelerate time to market of the services and engage customers more seamlessly.
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