Menu
Menu
SaaS to transform the insurance industry in five years

SaaS to transform the insurance industry in five years

Their IT departments should prepare to become "brokers" between the wider business functions and relevant SaaS vendors, says Charles Juniper of Ovum.

Ovum says at least a third of all insurance companies are fully deploying or trialling software as a service (SaaS), and expects this trend to continue over the next 18 months.

Despite a significant minority of insurers remaining cautious of SaaS (for regulatory, risk and reliability reasons) there is almost universal agreement among insurance carriers that SaaS will have a significant impact on both the insurance industry and individual insurers within the next five years, says Charles Juniper, principal insurance analyst at Ovum.

The use of SaaS has moved beyond horizontal support functions such as email and backup and now plays an integral role within core business functions such as policy administration, notes Ovum in its report on The Current and Future Role of SaaS in the Global Insurance Industry.

Juniper says in the light of these findings, insurers need to keep in mind at least three recommendations as they deploy SaaS.

First: All insurers must plan to adopt SaaS within the next 24 months

"As SaaS becomes increasingly mainstream, all insurers must have a clearly defined and widely internally communicated strategy for SaaS and cloud,” says Juniper.

Read more: Unfazed by rapid change

Insurers should not wait for the technology to mature further or for remaining issues to be completely resolved, as this delay will significantly reduce the benefits of adoption.

Charles Juniper, Ovum

For the minority of insurers that do not have some level of SaaS strategy, it must become an urgent priority, he states. “They should not wait for the technology to mature further or for remaining issues to be completely resolved, as this delay will significantly reduce the benefits of adoption."

Second: SaaS strategies must incorporate benefits beyond cost reduction

Cost reduction is already seen as an obvious benefit of cloud and SaaS, but this is only one of many, says Juniper.

Read more: The State of the CIO 2015: The digital mindshift

Ovum believes most cloud strategies in the insurance industry today need to be more comprehensive and more fully encompass the potential for organisational transformation.

"In planning their SaaS strategies, insurers must focus on the transformative role SaaS can have on their organisation in the context of wider industry change. SaaS and cloud technology can play a critical role in supporting an insurer’s overall business goals and in supporting its wider ambitions whether that includes new products and services, regional expansion or entering completely new sectors.”

Third: IT groups should look to evolve towards a ‘SaaS broker’ model

"One of the consequences of SaaS adoption is that the IT function of many insurers will need to undergo significant change in their role and structure, and this is likely to give rise to some challenges in terms of change management,” says Juniper.

Read more: IDC: Cost not a concern as Kiwi firms look to the market for security assurances

In response, the IT function of insurers needs to evolve towards assuming a “broker" role, bringing together the wider business functions with relevant SaaS vendors.

“This change in role marks a distinct contrast to the more reactive stance of many IT groups currently,” he states.

Send news tips and comments to divina_paredes@idg.co.nz

Follow Divina Paredes on Twitter: @divinap

Follow CIO New Zealand on Twitter:@cio_nz

Sign up for CIO newsletters for regular updates on CIO news, views and events.

Join us on Facebook.

Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the CIO New Zealand newsletter!

Error: Please check your email address.

Tags change managementIT functionovumtransformationinsurerfinanceSoftware as a service

More about FacebookJuniperOvumTwitter

Show Comments