The market for cloud services in insurance, encompassing as-a-service offerings, is forecasted to reach $32.2 billion by 2026, up from $16.6 billion in 2021. Insurers have also decided to move to the cloud. Check out why.
The insurance sector is increasingly turning to cloud computing to tackle challenges like inflation and to stay competitive against InsurTechs. Cloud computing is recognized as a pivotal technology for established insurers, offering scalability and the agility to adapt swiftly to market dynamics.
The market for cloud services in insurance, encompassing as-a-service offerings, is forecasted to reach $32.2 billion by 2026, up from $16.6 billion in 2021. This growth is driven by cloud computing’s capacity to accelerate product delivery and reduce time to market, making it indispensable for insurers striving to maintain their competitive edge.
The Role of Cloud Computing in Insurance
The incorporation of cloud computing into the insurance sector represents more than just a trend; it signifies a fundamental transformation in how insurance companies function, presenting unprecedented opportunities for innovation, efficiency, and customer interaction.
McKinsey’s analysis suggests that cloud computing could have a substantial EBITDA run-rate impact on the insurance sector, projected between $70 billion to $110 billion by 2030. Cloud computing’s value primarily stems from rejuvenation (cost and risk reduction across IT and operations) and innovation (speeding up the development of new revenue streams through advanced analytics, IoT, and automation). This underscores cloud computing’s potential to reshape the insurance industry by facilitating faster product development, cost-effectiveness, and innovation.
This paradigm shift is particularly evident across various operational domains. Decerto, which offers software for the insurance industry, sees key factors in the growth of the cloud. Here they are:
Hosting Insurance Platforms
Cloud-hosted solutions enable insurance firms to achieve significant operational efficiencies. These platforms empower insurers to seamlessly manage policies, process claims, and engage with customers. The scalability of cloud hosting allows companies to adjust their infrastructure based on demand, ensuring that customer-facing applications remain responsive and accessible.
Data Storage and Backup
In an industry where data is both crucial and sensitive, cloud technology provides secure and scalable solutions for storing vast amounts of customer information. Cloud services for data storage and backup ensure that insurers can protect sensitive customer data against loss or breach, with encryption and advanced security measures in place.
API Integration
Seamless integration with various APIs is vital for insurers looking to expand their service offerings and enhance customer experiences. Cloud computing facilitates this by providing a flexible infrastructure that supports easy integration with third-party services. This interoperability is essential for developing a more connected ecosystem, enabling insurers to offer innovative services such as real-time pricing, telematics-based insurance, and on-demand coverage options.
Supporting Systems: ERP and CRM
Cloud-based Enterprise Resource Planning and Customer Relationship Management systems play a vital role in streamlining business processes and enhancing customer relationships. These solutions offer real-time insights into operations and customer interactions, leading to improved decision-making, operational efficiency, and customer satisfaction.
Claims Management
Cloud solutions streamline claims management by providing platforms capable of handling complex processes and data analyses efficiently. These systems offer streamlined workflows for claims processing, reducing errors and accelerating resolution times. Insurers leveraging cloud-based claims management can provide customers with faster and more transparent services, significantly enhancing the overall customer experience.
Agile self-managing teams, particularly in claims handling departments, have demonstrated increased customer satisfaction, productivity, and efficiency. This approach minimizes handovers and empowers teams to make decisions, essential for scaling operations effectively.
Cloud computing enhances the insurance industry by providing scalable infrastructure, facilitating efficient data management, and supporting innovative service delivery, significantly improving operational efficiency and customer satisfaction.
