SaaS to transform the insurance industry in five years
- 10 June, 2015 14:10
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.
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.
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.
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.
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.
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