Insurance companies and cloud computing

Author: Zuzana Kocáková

Digitization

15 reading minutes

Insurers need to focus on the customer, their needs and different preferences. Most insurance companies are moving their business data and applications to the cloud. Digital networks are one of the dominant themes today for consumers, but especially for businesses. Naturally, this also applies to the insurance industry. While FinTechs are developing the financial services sector with their new business models, InsurTechs are breaking into the insurance market with new digital ideas.

That’s all the more reason for insurance companies to develop their digital strategies. Cloud computing, in particular, plays an important role in this as an important part of the strategy digitalization. In cloud computing, applications, services and data are not installed on a local computer, but are provided as a service through either a private or public cloud. While private clouds use the company’s own servers or computing centres, public clouds are provided by external operators. The user no longer buys IT services in the form of software or servers – they just rent them.

Digitalization strategy: Insurance companies rely on cloud solutions

Cloud IT has been prevalent for a long time. According to Cloud Monitor 2018, a recent study conducted by Bitkom Research on behalf of KPMG, two out of three companies were already using cloud computing services in 2017. “Cloud computing is helping companies of all sizes meet the challenges of digital transformation. It has become widely accepted, ” said Dr. Axel Pols, CEO of Bitkom Research, when presenting the results of the study at Cebit.

The insurance industry is also building its digitalization strategies on cloud solutions. According to a survey conducted by Lünendonk & Hossenfelder, 39% of German insurance companies had a cloud strategy in 2018, which means that most German insurers have already started to gradually migrate parts of their IT infrastructure and applications to the cloud and now prefer to procure new infrastructure services and applications from the cloud. Of particular interest to insurers is the Internet of Services, especially Software as a Service (SaaS). SaaS licensing models allow users to access the software over the Internet – they pay a fee for use and operation, which saves them some of the acquisition and operating costs.

Cost-effective and schedulable

In addition to flexibility and time-to-market, economic aspects are also crucial for the SaaS model. At a time when new regulatory requirements must constantly be implemented, interest rates are barely yielding returns, and cost pressures and competition are much tougher, many insurance companies need to do one thing above all else – save. SaaS offerings can help, as they have huge potential, especially in terms of cost control, productivity and response times. Using SaaS can significantly reduce IT costs. High procurement costs and investments in hardware and software are eliminated.

Partner reward system

In contrast, only variable costs are incurred for services actually used. Pay-per-use in the form of, for example, an annual price-per-policy (PpP) agreement brings a range of benefits for both the SaaS provider and the insurance companies. Costs are only incurred for policies that are actually managed in the system. Paying on the basis of use and indirectly contributing to the economic result is an innovative, fair and, above all, partnership-based alternative to the market-based remuneration models that have been used so far. In addition, by knowing the fixed cost of the contract, the SaaS user gains long-term certainty for planning.

Smaller and medium-sized insurance companies benefit from this because they can participate in complex schemes as needed and without greater investment risk. And not only that: also administrative and management tasks are eliminated. This unburdening allows companies to focus more sharply on their core business and the services that differentiate them from their competitors. In addition, SaaS offers a high degree of flexibility, each service can be provided separately and tailored to individual customer requirements.

Access to data across all national borders

Customer Relationship Management (CRM) is also trending towards cloud computing: according to a study by analytics firm MUUUH! Consulting in 2018, 7 out of 10 companies are currently using CRM solutions in the cloud or plan to do so in the foreseeable future. The advantage is that, depending on their access rights, employees, agents or customers can quickly retrieve data whether in the office, on business or from home – even across all national borders.

Data protection, security, standardization and storage location are also among the most important criteria when deciding for (or against) cloud solutions. In many countries, the financial and insurance industries have strict regulatory restrictions that determine where customer data can be stored and who can access it. Therefore, cloud security solutions must meet additional requirements compared to conventional solutions. Insurance companies should therefore opt for cloud-based solutions and software architectures that meet their requirements for security, compliance, risk management and data integration.

Safe, flexible and tailored to individual needs

The msg.Insurance Suite will be your path to the cloud: This comprehensive management platform for insurance companies and pension funds consistently leverages the benefits of cloud computing while offering the highest standards of quality and security. It is a technologically sophisticated system that covers the entire insurance industry and automates all necessary business processes.

The msg.Insurance Suite and its many add-on modules are a benchmark in standardising processes and making them available online, expanding digital customer contact and customer service, and ensuring better integration and compatibility of new and existing technologies. The solution maps all core processes from product development, sales and portfolio management to performance processing, remuneration and payment.

The system, composed of various components that can be combined as required, is characterised by a high degree of pre-preparation. This significantly reduces time to market. In doing so, business cases are not only available for the back office, but are also available online via portals or apps for intermediaries and end customers. Our system is already successfully used by many insurance companies: by sharing this solution, our customers benefit from economies of scale and, thanks to regular updates, from further central development.

msg.Insurance Suite can be run as a cloud solution in a high-performance data center, either its individual elements or as a complete platform. Under the SaaS model, each functional unit available on the platform can be provided separately as a service. Services that are not relevant to competition, such as Riester’s administration of contributions, can be obtained from the cloud as managed services. This allows insurers to focus on the competitive environment and devote more resources, currently tied up in administration, to strategic and innovative projects.

The distribution of service tasks is adapted in detail to the needs and strategic direction of the insurer. For example, msg life may completely manage the operation and administration of the system, while the insurance company focuses on product development and customer service. Or insurers rely on the product models contained in msg.Insurance Suite and use the link to cloud services to test product models without large integration costs and without financial risk.

Security and data protection are of the highest priority: operations are run according to established processes that comply with applicable data protection directives and meet all international security and quality standards. Regular software updates also ensure that all regulatory and statutory requirements are taken into account and that the system is kept up to date. The requested performance of the computer is specifically adapted to the current need. Flexible cost structure, high quality of service, offloading of in-house IT, strict security criteria and compatibility with existing systems – discover msg.Insurance Suite and increase the productivity and efficiency of your insurance company.

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Insurance companies and cloud computing

Zuzana Kocáková

At msg life Slovakia I take care of the company culture, events and I am part of the marketing team. I like a job where I can be creative and contribute to making my colleagues at msg feel good. I regularly prepare for you not only news and interesting things from the world of information technology and insurance, but also from behind the scenes events at msg life Slovakia.