How is AI in Underwriting Poised to Transform the Insurance Industry?

Introduction

Personalized policies, rapid services, instant claim settlements, easy fraud detection, accurate risk analysis, cost optimization, and increased customer satisfaction - the list of cloud insurance benefits is too long. This explains why cloud adoption in the insurance industry is steeply rising. According to industry insights, cloud adoption in insurance has seen a rise of over 90% in the past couple of years.

While everyone is rushing to adopt the cloud, let us take a moment to understand cloud computing and why everyone is so enthusiastic about this transformative technology.

Cloud adoption means assessing storage, databases, software, and servers through the internet. Cloud-managed service providers like AWS facilitate organizations' access to computing resources over the internet, anytime, from anywhere. Cloud computing is like a genie in a bottle, granting you computing resources anytime, anywhere, and as needed. Cloud removes the burden of maintaining bulky on-premises IT infrastructure and facilitates resource availability at a much-reduced cost.

Accenture says cloud adoption in insurance can reduce IT investments by 30-40%. In addition to the cost benefits, cloud insurance also drives efficiency by streamlining insurance processes.

Cloud insurance platforms enable insurers to assess critical data. They can assess risks, process policy purchases, and handle claim settlements quickly and efficiently. What used to take days can now be done in minutes! It also results in enhanced customer satisfaction. Customers can view and compare different policies, understand coverage details, and pick the one that best suits their needs. The cloud provides transparency, facilitates informed decision-making, and sets the right expectations.

Many insurance companies are already leveraging the powers of cloud computing. From enhancing their data security to streamlining internal operations, insurance companies are exploring various use cases of cloud technology.

How is Cloud Computing Leveraged in Insurance?

Cloud-based solutions enable insurers to store and process applications on remote services via the Internet.

It is like renting a car. You could buy a high-performance Maserati, but it’s expensive, requires heavy maintenance, and lacks practicality. Also, purchasing a Maserati is not a feasible option for many.

Renting offers flexibility and cost-effectiveness.

Similarly, migrating to the cloud makes sense, considering the long-term cost benefits, scalability, and flexibility. Insurers can scale their resources up or down based on the demand.

For example, companies can scale up their resources during peak demand periods, such as monsoons or natural disasters, and scale down when the demand drops. Thus, cloud-based platforms offer unbeatable cost savings and enhanced efficiency.

Cloud-based solutions also enable insurers to securely store vast amounts of data related to policies, claims, and customers on the cloud. This central repository facilitates automating and streamlining policy issuance, renewals, and cancellations, improving speed and accuracy.

Delloite says ‘speed’ is the new currency in insurance, and rightly so.

Today’s digitally driven customers expect everything at the touch of a finger. Their groceries get delivered within minutes, and their travel bookings are done in a click, so why not their insurance?

With cloud technologies, insurance companies are pushing the envelope of innovation.

7 Benefits of Cloud Adoption in Insurance

Cloud computing has fuelled a paradigm shift in the ‘build-buy-acquire’ mentality. Today, big or small companies are moving to a more dynamic and cost-effective model of a ‘rent-try-evolve.’ With access to unlimited resources, insurance companies can afford to experiment, innovate, fail, and grow.

Check out the benefits of cloud adoption in insurance -

1. Streamlined Operations

In a recent survey, 52% of participants picked operational efficiency as one of the most crucial factors driving cloud adoption.

Lemonade uses cloud tech to streamline onboarding and claims. MetLife, too, migrated to the cloud to automate its processes, approvals, and payouts. Progressive Insurance implemented cloud technology to automate many aspects of claims management, resulting in quicker processing times and more efficient operations.

Several insurance companies are implementing cloud tech solutions for real-time data analysis, better risk assessments, predictive modeling, and easy claims management.

2. Optimized Cost Savings

Cloud migration can curb IT spending by about 30% - McKinsey.

Cloud-based solutions enable insurers to move from legacy systems and infrastructure to advanced cloud technologies. This enables them to automate and optimize workflows, significantly reducing operational costs.

3. Scalability and Flexibility

73% of insurance executives see scalability as a significant benefit of cloud adoption.

Scalability and flexibility fuel insurance businesses amid rising risks, market shifts, and changing consumer demands. Cloud computing enables companies to adjust resources on demand, avoiding over- or under-provisioning.

4. Simplified Data Management

One of the biggest benefits of cloud adoption is simplified data management.

Data is the backbone of insurance. Legacy systems ran on fragmented data, which hindered information accessibility and impacted performance and efficiency.

Cloud data storage solutions like AWS or Azure offer centralized and secured data storage and management. This not only makes the data easily accessible but also paves the way for data analytics, predictive modeling, and data-driven risk management.

5. Improved Internal Process

Medigap Life, a prominent US-based online insurance aggregator, optimized its internal workflow by migrating to the cloud. This resulted in an 88% reduction in their process execution time.

Cloud migration and modernization facilitate process automation, thus enabling reduced redundancies and faster responses. From policy underwriting, claim handling, and lead generation to ongoing support, cloud-based platforms elevate several internal processes.

Read more: How is AI in Underwriting Poised to Transform the Insurance Industry?

6. Efficient Team Collaboration

Cloud-based collaboration helps businesses shorten time to market, quickens product upgrade cycles, and gives a competitive edge. – Forbes

Cloud-based insurance solutions offer centralized platforms for accessing and sharing data securely. Teams enjoy enhanced capabilities in communication, product and service delivery, information sharing, tapping knowledge resources, and group problem-solving. Such collaborations improve business processes, including purchasing, manufacturing, marketing, sales, and technical support.

7. Innovation and Digital Transformation

According to McKinsey, with advanced analytics, companies have achieved a 40% reduction in average handle time, a 5-20% increase in self-service rates, and up to $5 million in employee cost savings.

Cloud computing has brought a seismic transformation in the insurance sector. From data analytics and AI to IoT and telematics, cloud tech is reshaping the insurance industry in unprecedented ways.

Today, insurance companies are breaking new ground with real-time asset monitoring and usage-based insurance coverages that take customization to the next level. With AI-enabled image recognition, insurers further push the edge with end-to-end automated claim processing and instant settlements.

Read the Full Article: How Cloud Adoption in Insurance Can Drive Efficiency, Innovation, and Growth