Post COVID, Every Insurer Needs Cloud Fluency

Lessons must be learned both for preparedness and efficiency gains, as well as for the changes to business processes and consumer preferences that may endure even when the immediate crisis has passed.

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COVID-19 continues to impact the insurance industry in a variety of ways—from employee issues to client service to financial outlook. Insurers are responding to the current public health crisis on multiple fronts—as claims payers, employers, and managers of capital. Each has its own distinct challenges, not just for the insurance industry, but for the economy and society at large. And while it’s unknown how much longer the crisis will last, its lessons must be learned both for preparedness and efficiency gains, as well as for the changes to business processes and consumer preferences that may endure even when the immediate crisis has passed.

In this landscape, insurers recognize the necessity of delivering value across a range of cloud and on-premise environments, known as hybrid cloud.  Needs range from managing mission critical applications to quickly testing and implementing solutions. More or less rapid digitization was inevitable, but the challenges as a result of the COVID-19 pandemic over the past year have certainly accelerated insurers’ digital journey.

There are a few reasons for this quick pivot. One, remote work is no longer a complementary strategy. Telecommuting has gone mainstream and is here to stay, and it will be the insurers with the right cloud services and infrastructure in place that seamlessly transition to this new era of work. Additionally, customers are demanding different interactions. In this era of all things contactless, digital services that can be accessed quickly and seamlessly are now part of this new normal.

More than ever before, insurers know that there is more risk to holding back on cloud than to making the move—in fact, the shift to public cloud and cloud-native platforms predicted to occur over the next decade may now take place over the next two or three years. But as that shift occurs, insurers will need to balance their critical workloads with their need to consume new data and new innovations from a wide range of IT environments.

Architecture Imperative

How will insurers source innovation when it lives in many different clouds, with many different large pools of data? How will insurers provide tools to actuaries, underwriters, claims adjusters, and marketers that work across those IT environments?  And how will IT secure, monitor, and manage across that range? A well-considered hybrid cloud architecture will be essential to compete. Without it, insurers will lose access to innovations their competitors can access, or worse, will open themselves to cyber-risk and regulatory scrutiny.

As we approach the one-year anniversary of COVID-19 lockdowns, here are some of the most important reasons why insurers should pivot to a hybrid cloud strategy:

  • Freedom to innovate:One of the biggest appeals of the hybrid cloud has always been its adaptability. A hybrid cloud infrastructure helps insurers innovate by powering consumption of new technologies, such as AI, blockchain, and confidential computing, making them available across both existing data stores and the public cloud. This allows insurers to build new customer experiences, achieve operational efficiencies, and keep pace in a rapidly changing and competitive industry.
  • Help synchronize operations: The insurance industry has historically struggled with segmentation, particularly larger carriers with multilines. Hybrid cloud provides stable and secure connection. Regardless of where workflows run, insurers can ensure that their operations, applications, and data sources are integrated and connected, resulting in a unified approach to doing business.
  • Partners and platforms: Partners and platforms have been the talk of the industry for years—with both either moving to the cloud or born on the cloud to begin with. Over the past few years, nimble and innovative InsurTechs have played an important role in helping shape the insurance landscape, forcing incumbents to take a digital-first approach. Now, with the emergence of hybrid cloud, it’s easier for insurers to collaborate and source services to build these platforms—together.
  • Scale as needed: It’s no secret that insurers have invested heavily in hardware, software, and development over the past few decades. Decades of data and mission-critical workloads across environments means a sudden jump to the cloud is not easy—nor necessarily the right answer. A hybrid cloud architecture protects and uses existing investments while providing the right foundation for modernization. This approach means insurers can start to shift applications away from heavy up-front capital spending and toward operational expenditure.
  • Manage complexity: We’ve seen insurers with great initial enthusiasm to consolidate on a single technology stack falter as business demands and regulatory concerns limit adoption, leaving a halfway-complete IT restructuring that results in higher costs and risk exposures.  Working with architectural concepts like containerization and orchestration, built on open IT standards, gives insurers a way to manage tools, controls, and workloads wherever they are best suited to operate.  Insurers can get the best of all technology worlds and concentrate on assembling new risk products and services without fear of creating “new legacy” IT.

The COVID-19 pandemic was an unexpected turn of events that forced insurers to pivot their short and long-term business strategies. Executives must come to terms that that these pandemic-induced changes in strategy, management, operations, and budgetary priorities are here to stay.

Accelerated investment in digital transformation—AI, cloud, platforms, ecosystems—is here to stay. This presents an exciting opportunity for forward-thinking insurers who can manage complexity and drive competitiveness by building much-needed digital transformation into a stable, future-proof technology strategy—while laggers still wait for things to “go back to normal.”

It’s Not Just COVID Pushing Insurers to the Cloud


Mark McLaughlin, IBM // Mark McLaughlin leads IBM’s insurance strategy, solutions sales, and partnerships worldwide. He has more than 20 years of experience in the insurance industry involving personal engagements in 30+ countries with experience in AI, data analytics, cloud, CRM, marketing, mobile technology, classified defense projects. McLaughlin has directly led engagements at over half the U.S. top ten insurers and has delivered innovation to more than half of the global top 25.

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