Increasingly the insurance industry has been disconnected from its customers and their needs.
“Often, customers will go onto a marketplace and pick the lowest offer. What this means is that during the sales process, insurance providers have very little interaction with the consumer,” says Mani Nagasundaram, Head – Cloud Sales, Financial Services at HCLTech.
This situation leaves insurers in the dark on their customers' needs and makes it increasingly challenging to create product offerings at speed that differentiate themselves in the market.
Further, the majority of global insurance providers run on mainframes. IBM estimates that this applies to nine out of ten of the largest life and health insurance providers. The same is true for most traditional industries and while this is necessary to host critical and core IT, the rigidity of on-premise systems hinders agility and the ability to innovate.
The rise of nimble InsurTechs born natively in the cloud are creating new opportunities in the insurance industry. These companies are gaining a significant market share by offering faster, more personalized products to customers looking for a more tailored and flexible experience, which is challenging the traditional insurers in their core business. The InsurTech market is predicted to reach $166.4 billion by 2030, growing at 39.1% CAGR, according to Acumen Research and Consulting.
“Overall tech cost is another big challenge for large insurers. In addition to running large mainframe estates that are expensive to run, they have also accumulated a huge amount of technical debt which poses a big problem too,” says Nagasundaram.
A right cloud strategy that enables large insurance providers to move out of their legacy data centers and retire any accumulated technical debt represents a good solution to these problems. In such an environment, incumbent insurers can build cloud native applications and deliver relevant and tailored products to their customers.
Taking this a step further, industry cloud platforms offer an even more focused approach that will help insurance providers to future-proof business models and accelerate relevant product’s time to market, while delivering exceptional customer experience.
Industry cloud for insurance
Industry cloud platforms are on the rise. According to Gartner, by 2027 enterprises will use industry cloud platforms to accelerate more than 50% of their critical business initiatives. This was 10% in 2021.
These platforms offer industries like insurance the ability to consume industry-specific use cases and data models, on top of the technologies that cloud providers offer, which enables them to build customized and personalized solutions on a scale not possible on-premises.
“Financial services are highly regulated, with regulators imposing many restrictions on insurance companies. An industry cloud for insurance needs to have all those regulatory, security and resiliency components built in for the customer, to build innovative applications that are relevant to the industry,” says Nagasundaram.
To help insurance providers navigate the complex regulatory landscape without compromising on innovation and agility, HCLTech has recently announced its Industry Cloud for Insurance. This has been built on top of AWS as a complete end-to-end stack for insurance.
"The HCLTech and AWS Business Unit are focused on building industry clouds that can meet the needs of specific industries. Industry clouds offer a number of benefits as they incorporate industry specific features and functionality that are not available on traditional platforms. This increases productivity, efficiency and GTM timelines. Industry clouds underpin security and compliance as they’re designed to meet specific industry security and compliance requirements of a particular industry. With our experience of working with various industries we can bring our expertise together to enable a faster TTM at reduced cost for our clients,” says Prabhakar Appana, SVP and Global Head of AWS Business Unit.
He adds: “We co-invested in building this insurance cloud platform as a one stop shop for the insurance industry, bringing together scalability, security, compliance, innovation at reduced cost, increased efficiency and improved customer experience, which is completely underpinned by AWS Cloud. This helps to address some of the market concerns, especially in today’s world with rising inflation, with consumers looking for better cost-efficient options. Insurance companies are geared up to address these problems and we have a complete solution to help them achieve this.”
Nagasundaram continues: “On top of the technology and Infrastructure-as-a-Service layer that comes from AWS, we’ve built various insurance components that customers can simply take out and add to their own platform. We’ve configured the platform in such a way that it complies with all the regulations here in the UK, while creating a comprehensive workflow that extends right from the time when policies are sold all the way to when they’re paid out. We’ve got four large insurance providers from the UK on the platform and are continually adding new features, such as AI-enabled document management and generative AI capabilities.”
The industry cloud solution is built around an ecosystem of partners, including FinTechs. As it’s built on AWS, this can scale infinitely. Using Amazon Connect as the contact center solution, the platform also provides a capability to search through petabytes of transcribed voice recordings from past customer interactions. This data is used to generate never-before-seen insights that improve customer experience with personalized offers, but also identify new products that can be brought to market quickly.
“Our vision for insurance cloud is that while it’s a comprehensive end-to-end, cloud-based solution architecture, it should also be highly composable and componentized so that any insurer can utilize it irrespective of what cloud they have. Various components of this solution will also be available on Amazon's marketplace soon,” says Nagasundaram.
Appana adds: “This platform enables insurance providers to quickly react to changing market conditions and not only helps our clients accelerate their journey to the cloud, but also helps in improving their go-to-market strategy, while keeping costs low and maintaining security and regulatory standards.”
More to come
The industry cloud for insurance is just the beginning. HCLTech plans to launch end-to-end industry cloud solutions for other areas of financial services, including retail banking, wealth management and capital markets in collaboration with Fintech and ISV partners.