Many insurance intermediaries maintain a tenacious grip on outdated tools to manage their workflows. This mentality is normal and understandable. It's also likely holding your business back.
This reliance on antiquated tools—like Excel spreadsheets, fax machines, pen and paper, and outdated legacy systems—is as common as it is destructive. These tools present problems functioning in business environments and at scales they simply weren't designed for. Agency Management Systems, for instance, that the lack the ability to provide a 360-degree view of your business and manage complex processes, are undoubtedly costing many agencies revenue.
The insurance distribution market is undergoing a rapid transformation, causing unprecedented and intense pressure on commissions among agents.
Efficient workflow management, effective customer service and data transparency, with the agility expected of modern businesses, has emerged as a key differentiator between those capable of embracing this change and those who will be left behind by it.
Why not embrace the cloud?
Cloud environments can transform your insurance agency/brokerage, as they represent a perfect technological solution for meeting the insurance distribution needs of today and the future.
Those prepared to invest in the process of migrating their technology stack to a cloud-based Saas/Paas model will be able to optimize the use of their resources and undoubtedly reap substantial benefits, such as:
- Data transparency
- Cost reduction
- Significant gains in performance
The cloud-based technology also eliminates the need to acquire and maintain servers, operating systems, hardware devices, and more.
Flexible workflow controls and watertight audit trail capabilities, which are features of many cloud-based platforms and extremely difficult to achieve using locally managed systems, make accurately tracing frequently-updated documents - such as policies - a breeze.
So, what's causing the hold up?
Most of the agency/brokerage executives who are hesitant about migrating to the cloud usually cite these three reasons, which are actually misconceptions:
1. 'Lift and shift' doesn't work
Lift and shift cloud migration strategies involve enterprises taking existing apps and porting them directly to the cloud without substantially modifying their design.
Although often regarded as a controversial choice for handling cloud migration among IT professionals, according to Gregory Ness, VP of worldwide marketing at CloudVelox, these strategies are sometimes the most favourable where organisations'outdated technology is literally causing them to lose money by the day.
Compared to more technologically sophisticated methods of cloud migration, , 'lift and shift' represents the 'rough and ready' approach to getting infrastructure online.
For technical reasons, these 'lift and shift' systems can't take full advantage of the features that native cloud solutions offer, but in the case of less sophisticated software, such as that used for simple client contact, the drawbacks of this are often less significant.
For many global agencies/brokerages, legacy systems are causing their agents palpable and widespread pain-points, such as the inability to efficiently share documents with colleagues and clients located in other locations.
In such cases, lift and shift migrations are a perfect quick fix that buys IT teams time to work on the lengthier, but ultimately more suitable, process of actually re-architecting the software or replacing it completely with a more efficient solution.
2. The ‘sunk costs’ myth
According to a TechTarget survey, 35% of insurers say that sunk costs - that is, money irrecoverably invested on legacy infrastructure expenditures - are holding them back from cloud adoption.
The initial deployment to the cloud can be a costly affair, depending on the amount of volume being moved.
Over the long term, however, any financial model which shows a greater cost for cloud-solution, relies on IT managers providing unrealistically accurate predictions as to server requirements and ignores the obvious financial benefits of making the move, such as zero capital costs and no need for redundancy hardware. It also follows the false assumption that cloud is simply the 'online' equivalent of the data center.
When you also consider the fact that six out of ten insurance companies already overhaul their legacy infrastructure every three to six years on average (AccentureStrategy), the potential cost savings of simply ‘letting sleeping dogs lie’ seem ever less convincing.
The differential between declining cloud-based platform prices - which have dropped 66% since 2013 - and the growing costs inherent in maintaining unsupported software are also only likely to widen.
Cloud solutions bring added value of their own. Whether opting for a straight cloud deployment or the increasingly popular middle-ground of hybridisation, investing in a solid cloud deployment is a long-term, future-proof investment, with dividends that will accrue for years.
3. Transformation can be achieved without the cloud
The most pervasive myth, however, appears to be that achieving true, technological transformation, such as deploying a system so vastly improved that it blows customers away and shifts consumer expectations, can be done without utilizing cloud services.
According to research from AccentureStrategy, 82% of competitors of new, cloud-based entrants to the insurance industry market described them as "disrupting" the status quo. These insurance-tech entrants are building solutions that would be impossible to achieve without the advance of cloud computing.
A separate Accenture point-of-view highlights four areas beyond cost savings in which insurance organizations, such as agencies/brokerages, can leverage the transformative benefits of cloud-enablement.
- Analytics - a key concern for agents/brokers - are also greatly facilitated by the cloud, which creates a cost-effective means to access, leverage and distribute data nimbly within an agency as well as to clients.
- Cloud-empowered agencies can drive collaborations that would have been impossible in the absence of a centralized and cloud-powered business network, such as offering instant insurance purchasing through affiliate links and providing health insurers with information direct from policy-holders' wearables.
- The consumer experience is greatly improved by the ability to create simple interfaces such as online portals where customers can easily conduct basic administrative tasks like renew policies and compare insurance options. Empowering consumers to handle these tasks themselves also increases the efficiency of the organisation as a whole. By freeing up time that would have been spent helping clients with repetitive tasks, agents/brokers can both improve service level agreements (SLAs) through increased efficiency and realize substantial savings on human resource overheads, reducing the overall cost of service.
- Each agency/brokerage has a unique workflow and its own specific requirements. With a cloud environment, 'as required' applications can be added when needed to an agency’s technology stack, and they can be deployed or retired also as needed. This kind of flexibility and customization is almost impossible to achieve on locally managed networks.
Are you ready for change?
Insurance agencies/brokerages are an ideal use-case for showcasing the power of cloud computing.
Unfortunately, inertia and unfounded fears are continuing to deter many agents/brokers from making the move.
Those that adopt the cloud will retain a competitive advantage for years to come, and that thought alone should motivate every insurance agency/brokerage that hasn't done so to take the leap.