Posted by Accenture
Despite having transitioned many business applications to a cloud environment, insurers have been slower to migrate core applications, according to a new report from Accenture.
Titled “(Almost) Ready for Cloud: Accenture Explores Insurers’ Cloud Readiness” and based on a global survey of insurance executives, the report found that insurers are readily adopting the cloud, with more than half (56%) developing a new IT operating model to support the transition.
According to the report, cloud adoption is integral to enabling insurers to quickly add new online services, develop applications and improve the customer experience. Cost savings is the top benefit that surveyed insurers expect from cloud adoption (cited by 58%); other commonly cited benefits include gaining more visibility into and control of IT usage (48%) and freeing up internal resources (46%).
Yet when it comes to moving their core platforms to the cloud, most insurers still have a long way to go. The study highlights that core platform transition in key areas such as policy administration and claims management is rare, and while many respondents have plans or pilot programs in place, only a few insurers have completed work on major cloud applications. Some have hesitated in moving core platforms to the cloud due to concerns about keeping these core systems highly functional.
“To drive growth, insurers should be working to identify what legacy applications can have the most immediate business impact as cloud-based applications and take steps to migrate them to the cloud,” said Andrew Poppleton, head of the technology advisory practice within Accenture’s Financial Services operating group. “While a move to the cloud is a great undertaking, carriers can take a ‘cloud enabled’ approach to migrate key applications, working closely with vendors while maintaining the effectiveness of their core systems throughout the journey. It’s time insurers make their cloud aspirations a reality.”
According to the report, insurers have made progress in moving both applications and infrastructure-related functions to the cloud. 60% of respondents have conducted code-level assessments and have confirmed the application migration type and effort required. They have also made progress in identifying which legacy applications are good candidates for early migration to the cloud, with the top three being databases (cited by 70% of respondents); analytics and business intelligence (62%); and the company website (58%). Meanwhile, data backup/archiving (cited by 76% of respondents) and disaster recovery (68%) are two infrastructure-related functions often mentioned as having already been moved to the cloud.
While insurers have completed critical steps in their cloud transition, the report notes they must address concerns around talent. Only half (50%) of respondents see their employees’ skills related to cloud strategy as “mature”; given this shortage of mature talent, the report suggests that insurers should invest in talent and training as well as technology when setting cloud budgets.
Security is another area of concern, as only 36% of survey respondents say their current policies on cloud-related security are “mature.” Encouragingly, insurers are taking steps to bolster their security efforts around the cloud, with 58% saying they have completed a planning process for cloud security.
“The cloud provides extraordinary new opportunities for insurers,” said Daniele Presutti, who leads Accenture’s Insurance practice in Europe. “Beyond cost savings created by improving asset allocations and reducing unnecessary capital expenditures, the cloud can help create a differentiated customer-experience, improve claims efficiency, and allow for better use of data, which can lead to better pricing and risk assessments. It’s encouraging that insurers are taking thoughtful steps to develop an effective cloud strategy. Now they need to accelerate those efforts and make transitioning their core platforms a priority.”―CT Bureau