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As society embraces the digital age, the surge in data usage presents challenges for companies to maintain their vital information, programs, and systems on in-house servers. However, the solution to this dilemma, which has persisted since the internet’s inception, has only recently gained widespread adoption.

In recent years, cloud computing has transitioned from being a strategic technology to an essential one. The COVID-19 pandemic accelerated the adoption of a “cloud-first” approach across various sectors, including financial services and insurance. 

While insurers were initially skeptical about cloud computing, they now recognize its value and actively integrate cloud solutions into their practices.

Cloud computing in insurance

According to a recent study by Gartner, 78% of insurance companies have adopted cloud technology in some form. 

Cloud computing involves the utilization of remote servers hosted on the internet to store, manage, and process data, as well as to deliver computing services specifically tailored to meet the needs of the insurance industry. 

This approach replaces traditional on-premises infrastructure with scalable, on-demand resources accessed through the internet. 

Benefits

Cost efficiency

Cloud computing eliminates the need for upfront investments in hardware and infrastructure, allowing businesses to pay for only the resources they use on a pay-as-you-go basis. 

Add to that, Insurance-as-a-Service has gained popularity nowadays, as traditional insurers have turned to insurtechs like LenderDock to leverage the cloud computing capabilities to adopt new insurance environments. 

This helps in reducing capital expenses and converting them into predictable and manageable operational expenses.

Scalability & flexibility

Insurance companies can easily scale with the help of cloud-based solutions. This flexibility ensures optimal resource allocation, preventing over-investment during slow periods and enabling efficient management of peak periods. 

Additionally, cloud services allow flexibility in insurance processes and accessibility of business data and applications from any location which fosters collaboration and remote work, enhancing productivity.

Disaster recovery & business continuity

Cloud providers offer robust data backup and disaster recovery solutions, ensuring secure data backup and accessibility in case of disasters or outages. This minimizes downtime and maintains continuity of operations.

 Unlike traditional recovery methods, which are often complex and time-consuming, cloud-based systems streamline recovery with automated backups and rapid data replication.

Greater innovation & insight

With data stored in the cloud, insurance companies can implement tracking mechanisms and generate customized reports for organization-wide analysis. 

Cloud infrastructure also empowers insurers to swiftly develop and launch new products and services, eliminating the need for lengthy IT setup times. 

This agility is crucial in a competitive landscape where the speed of bringing products to market is of utmost importance.

Taking the initiative 

The post-COVID era we are now in has seen insurance companies and other service providers accelerating the shift to cloud computing.

Lemonade

Originally based in Israel, the insurance unicorn opened an office in USA but has now shifted most of its core operations to the cloud, hosted by Amazon Web Services (AWS). 

Cloud computing, coupled with their AI-powered chatbot, Jim, has enhanced customer interactions.

Allstate

Allstate has leveraged Microsoft’s Azure AI platform to adopt cloud-based solutions. By employing AI-based virtual assistants and predictive analytics, the insurance company has improved claim processing, personalized service recommendations, and risk assessment practices.

To sum it up

Cloud computing doesn’t just mean moving to the cloud. 

As you have seen in earlier paragraphs, for the potential of cloud computing to be realized, complementary technologies like Artificial Intelligence, Advanced Analytics, and Machine Learning should be developed in tandem with the approach.