How the cloud can enhance insurers' operations

Cloud computing has moved beyond basic digital infrastructure leveraged for computational power or storage to replace on-premise servers. Today’s bleeding-edge cloud services are of a higher order, utilizing advancements such as machine learning (ML) to analyze customer communications and extracted data to pre-populate claims forms.

“Our data scientists and developers created these services using an API-driven model so that services can be quickly strung together like building blocks and trained to support a solution for insurance,” explains Tony Jacob, global business development lead — insurance at Amazon Web Services, Inc. (AWS). “It doesn’t take months to create a new solution for the business now — it’s weeks. But some insurers haven’t viscerally felt this yet.”

For example, insurers that embraced “cloud DevOps” models and leveraged managed services such as natural language skills for chatbots, call routing and claims assignment can build contact centers that can scale with volume, while providing better service through machine learning facilities that support the interaction, Jacob says.

“In the case of Mutual of Omaha, they embraced Amazon Connect, but also natural language processing for self-service channels, and serverless for workflow behind the scenes,” Jacob says. “They say that they expect to improve customer engagement across the contact center and self-service channels, and gather insights from the interactions that will add to the level of customer intimacy they can display.”

Here are additional insights from Jacob regarding the power of cloud computing in insurance.

PC360: How can the cloud help insurance companies achieve more efficient and agile operations?

Jacob: Three words — Lambdas, step functions and ML services. Those are the building blocks for modern application development. When you hear “serverless” software development, or low-code/no-code platforms, this is what we’re talking about.

This combination is helping insurers peel off old, rigid processes from their legacy IT systems, and re-engineer those processes as the business envisions and in a stateless way. It provides a new way to think about modernization. Perhaps you don’t have to consider the big bang approach of replacing core systems, or an aging business process management layer. You may be able to peel away the old processes and replace them with a very event-driven and flexible workflow.

For example, when Liberty Mutual transitioned to a serverless architecture, the insurer reduced its operational burden and realized substantial cost savings. The company also used serverless solutions so that it could rapidly build more agile, high-quality applications. By eliminating operational overhead, serverless architecture facilitates experimentation, empowering teams to release quickly, get feedback and iterate to get to market faster.

We’re seeing an entire ecosystem develop of low-code/no-code platform providers that are helping insurers greatly speed their digital transformation efforts.

PC360: Can cloud computing help improve employee productivity?

Jacob: IT productivity should be a given. Insurers want to do away with the undifferentiated heavy lifting. They want to enhance the underwriting and risk selection processes, simplify claims and enrich the customer experience, not build data centers. There is an overarching opportunity to dispense with things they shouldn’t be doing and focus on the things that they want to be doing. And employee productivity is benefiting from many of the managed services we discussed, the customer insights from the ML services and the agile processes from serverless.

Farmers Fire operated its policy, claims and billing systems on-premises for three decades, but the system was difficult to operate, expensive to maintain and lacked a modern disaster recovery solution. Farmers Fire sought a cheaper, faster, highly available, cloud-based alternative and selected the BriteCore platform on AWS. BriteCore stood up a Farmers Fire demo instance in just five minutes. In transitioning to BriteCore, Farmers Fire moved 30 years of data to cloud database services — in this case, Amazon RDS and Amazon Aurora — which then created interest in moving other on-premises systems to the AWS Cloud. Productivity also jumped. Entire tasks were automated, including several policy lifecycle processes that consumed significant time and attention from staff members. In the end, Farmers Fire has been able to process a higher volume of business with a smaller staff.

PC360: Are there are cost savings insurance companies can realize by using cloud computing?

Jacob: With the cloud, you don’t have to lay out the capital upfront for the servers and the data centers, and you instead get to pay for it as you consume it.

Fundamentally, we help insurers do two things. One, transform the data center. And two, innovate more quickly by embracing cloud DevOps. We’ve talked about the latter, but the former is important, too. Celent and Gartner have both estimated over the years that close to 70% of an insurance carrier’s IT budget is used to maintain legacy systems. That does not leave a lot of budget for transformation and growth initiatives — at a time when every board is discussing transformation, and every carrier wants to get back to profitable premium growth.

Our observation is today, when carriers look for a new core system — be that policy administration, claims, billing or a full suite — they’re asking for systems that can be delivered as a managed service, or as software as a service (SaaS). We’ve helped many core systems providers with their transitions from on-premise to SaaS. The Accenture Life Insurance Platform, FAST Technology, Britecore, FINEOS, many of the solutions within Insurity’s portfolio and Guidewire are just a few examples. And, we are seeing an expansion from the traditional core set of solutions to the adjacent systems.

For example, I mentioned Pegasystems runs its Pega Cloud business process management suite on AWS, and Hyland recently made its enterprise content management solution available in the AWS Marketplace. All of those take advantage of the economics of the cloud to the benefit of their customers. And many are also taking advantage of higher-order cloud services to offer insurers value adds — such as an associated cloud data warehouse, a cloud data lake, purpose-built cloud database services and many of the ML services we’ve discussed.

PC360: How easily can cloud-based solutions be scaled up?

Jacob: Cloud-based solutions, like serverless architecture, can scale up automatically to handle sudden increases in event volume and scale down when demand is light — all without extensive management of the underlying platform infrastructure.

For example, Admiral Group interacts with most of its customers online via its digital channels, but following the lockdown implemented to fight COVID-19, the company had to work toward service continuity while ensuring the safety of its 1,200 employees. In two and a half weeks, Admiral Group built a solution based on Amazon Workspaces, a fully managed desktop virtualization service for Windows and Linux that enables access to resources from any supported device. They scaled up very quickly, going from 0 to 100% of their employees working from home. Employees were able to connect to a virtual PC from their own or a company device and have the same work experience as they did at the office. It took only three days for the Admiral Group to return to responding to customers as normal.

PC360: What are some of the challenges insurers might face when making the transition to a cloud-based system?

Jacob: Legacy IT still puts quite a lien on IT budgets. By migrating or modernizing on the cloud, we know that insurers can retire technical debt. That process to migrate or modernize often also helps the insurer build new cloud muscle, and build cloud excitement. That aspect of culture is as important to moving to the cloud as the technology itself. We have to help our customers feel the speed of the cloud, and feel both the IT value and the business value of the use cases they can enable with cloud-native services.

This is an exciting time in insurance. With more than 250 services in AWS, I believe we can help insurers across the value chain, from distribution to underwriting to core systems to financials, and all steps in between. And we can help our customers do so at a speed that is unlike anything they’ve seen before. Really, we just need to help the architects and developers do it first. Once they feel it, and show the business what they can do, they’ll take us the rest of the distance.

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