Cloud computing is having a huge impact on the insurance industry, with benefits for internal processes, new customer acquisition, and policyholder loyalty. Cloud Computing has had a huge impact on all sectors, in terms of business processes, production dynamics, and in the relationship with customers, users, employees, and suppliers.
We’ll start by consulting industry data to have a better understanding of this impact.
According to a 2018 Gartner study, cloud users will double by 2021, while the market around this technology will increase from $153 billion in 2017 to an estimated $302 billion by 2021. According to another Gartner report, by 2022 about 90% of organizations will use “cloud” services. Moreover, skills in Cloud Computing are the most requested by companies in any sector, according to research from LinkedIn.
For more information on cloud computing, the different types of systems, how to best exploit the potential of this sector, and the most important future trends, read this article.
In this post, we’ll be focusing on a specific sector: insurance. We will focus, in particular, on three aspects that – in a nutshell – cover the whole range of action of a company in the insurance sector. We’ll start from the improvement of internal processes, to winning new customers, up to the loyalty of existing customers.
But first, let’s start with a quick look at how digital transformation has changed the sector.
Insurance Industry: a sector in a moment of change
Digital transformation has profoundly revolutionized the world of insurance.
As with other sectors, digital has greatly accelerated processes and helped simplify the dialogue between companies and customers. It has also resulted in a marked that is now crowded with new players, making the challenge for loyalty more difficult than ever before.
One way to summarize these changes is to consider that the user (therefore the insured), once a figure at the culmination of business processes, is now at the center of the business. This emphasizes the fundamental importance of personalization and the necessity of a larger investment in Customer Service and Customer Communication departments.
To go into more detail, Bain & Company and Google have identified seven key technologies that are driving digital transformation in the sector. These are technologies that have already radically transformed the world of Insurance and that will have an even greater impact in the future:
- A modern IT architecture, at the center of which are Cloud Computing systems;
- New online sales strategies, based on the collection of Big Data, and as a result, utilizing advanced targeting;
- More advanced analytical tools (Advanced Analytics);
- Machine learning, to improve decision-making tools, both for internal processes (such as risk management) and for external dialog with customers (to attract or retain);
- Internet of Things. Consider the enormous impact of having cars (or houses) increasingly connected to the network and the impact this could have on the sector;
- Distributed ledger” technologies (DLT). These are systems based on a distributed register of data, in which all the nodes of a network have the same copy of a database that can be read and modified independently from individual nodes. This is also where blockchain technologies can have a major impact;
- Virtual Reality. Imagine having the ability to reconstruct a road accident, and all relevant details, and perhaps based on information collected through IoT, in 3D.
Given this brief but fundamental list, one thing is clear: these drivers of innovation will all rely on Cloud Computing and its increased computing power, the simultaneous reduction in costs, the increased flexibility and scalability, and the enormous possibilities from an omnichannel perspective.
The 3 main advantages of Cloud Computing in the Insurance industry
Next, we’ll identify the three main themes around the most important advantages of Cloud Computing in the Insurance Industry ecosystem.
1. Cost reduction and process optimization
As we anticipated, the first advantages of Cloud Computing systems are seen inside the organization, chief among these, the financial advantages.
Companies that use cloud systems greatly reduce the cost of purchasing hardware and software, thanks to on-demand and pay-per-use optics. They no longer have to buy local servers and data centers, which require specialized personnel to manage and maintain, and which take up physical space and consume electricity 24 hours a day, 7 days a week.
And, since most services are provided on-demand, you can have access to abundant computing resources quickly, easily, and with the flexibility your business needs, and without an expensive hardware or software investment.
All of this is in favor of optimizing performance and internal processes, also because, by hosting platforms, software, and databases remotely, you’re able to free up memory and computing power on individual machines within the organization.
Optimization and efficiency also apply to the production of documents, such as policies, forms, and contracts of various kinds. This constitutes a very expensive (and complex) element of insurance company processes. Today, such processes can be managed in a totally digital and cloud-native way.
This is exactly what Doxee is doing in collaboration with RGI, a leading European insurance company, with the PASS_Insurance 4.0 platform (to learn more follow this link), which supports dialogue with customers (more on this point below).
2. Acquiring new customers
Cloud Computing allows you to collect and analyze large amounts of data (“Big Data”); and – above all – to select the most important, functional and “deep” data (in other words, “Smart Data” and “Deep Data”).
In other words, it is a matter of going in search of the digital traces that we all leave, daily, on the web.
It’s important to underline that, in Italy, more than any other group, millennials are the largest web audience. In Italy, this is around 13 million people, who prefer the web (76% of whom are permanently connected) to research and choose the products that fit their needs; this same group is also more likely to give away their data in exchange for newsletters, downloads, requests for quotes, and other useful information or services.
Once these “traces” have been collected (in an omnichannel way, of course) it will be easier to identify the real audience and to further segment this audience that can be approached with targeted actions that are as tailored, as personalized, as possible.
We understand that this data-driven approach is by far the most effective way to secure new customers.
3. Build policyholder confidence
According to an analysis by Bain & Company, winning a new customer costs between 6 and 7 times more than retaining one, through a satisfactory Customer Experience.
From this, we can understand why all companies are investing resources and attention on the Customer Service department. Here, the objectives are to increase engagement first and foremost, to retain customers (customer loyalty), and to initiate effective up-selling or cross-selling actions.
Now, what is the most effective way to improve the dialogue with customers, to make it effective and increase the sense of trust?
The answer is a strategy that is not new: It’s about addressing each customer, each person, in a different way, depending on their unique characteristics, behaviors, and needs. Today, this is at the center of today’s new strategies and future trends.
By exploiting the power and opportunities of Cloud Computing, companies can get to know their customers in greater depth. It is the frontier of personalization, which goes beyond segmentation, to arrive at a truly one-to-one dialogue between company and customer, in interactive and omnichannel mode.
Think of how fundamental this is in the insurance sector, which is characterized by a large number of potentially very slippery touchpoints (think of the collection and payment phases; during the claims process, and including dealing with unsatisfied customers).
That’s why more and more insurance companies are relying on organizations that specialize in both cloud and personalization services. Doxee has been involved in this sector for years, and collaborates regularly with leading players such as Axa, Credem, and PosteVita.