Insurers Embracing New Technologies
and Business Models
Insurers have been comparatively late to the cloud because
the industry is, by nature, risk averse and conservative. Leg-
acy insurance applications have invested heavily in data
centers over the years to store troves of data and run big,
enterprise applications often serving millions of customers.
Many of the applications that support old-line business
functions, such as life insurance policies, were written 20 to
30 years ago. Rearchitecting many of these applications to
run on the cloud has generally been cost and time
prohibitive.
But executives are now being pushed by the marketplace to
embrace new technologies and
new ways of doing business. On
the front end, they are using
cloud to enable digital business
models that improve business
agility through speed to market,
flexibility and a more custom-
er-focused approach. On the back
end, cloud is enabling greater IT
efficiency, with systems that are
highly automated and event-
driven, enabling a higher quantity
and quality of releases.
There are many ways insurance companies are using tech-
nology to respond to the threats of digital disruption. Here
are a few examples of how skillful uses of cloud and data are
positioning companies to compete strategically in the com-
ing years.
A Focus on Innovation
What would the insurance industry look like if it were not
tied to so many legacy systems and processes? A fleet of
startups have answered that question in recent years by
creating cloud-first business models that attempt to
streamline the delivery of insurance services.
One innovator, Lemonade, describes itself as an “insurance
company powered by artificial intelligence and behavioral
economics.” Homeowners and
renters click on a Lemonade
app and talk through their
claims with an AI-driven bot.
Artificial intelligence processes
the information and replicates
the tasks a claims agent would
go through. The company says
mobile users generally get
insured in 90 seconds and get
paid for claims in three
minutes.
Insurers have used the
cloud's strength and
flexibility to do more
than develop and
deploy consum-
er-friendly apps. The
cloud has also allowed
them to experiment.
Customers are comfortable using
on-demand, consumer-friendly
applications in their daily lives, so
they are pushing for mobile apps
to serve their insurance needs. Executives at established
insurance companies are seeing startups get up and run-
ning fast with cloud technology creating an on-demand
approach, and they realize they will lose market share if
they do not follow suit.
The numbers show that executives are buying into the
cloud transformation trend and the larger digital disruption
movement. A study by independent analyst firm Ovum
revealed that 67 percent of insurance industry CIOs believe
SaaS will completely transform the insurance industry in
five years or less — and 20 percent believe it will happen in
less than two years.
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SUMMER 2019
Another innovator, Oscar, built a
cloud-first health insurance
business on AWS. One of its
co-founders,
CEO
Mario
Schlosser, is a data scientist who studied AI at Stanford.
Another co-founder, Josh Kushner, is White House senior
advisor Jared Kushner’s brother. They used the cloud to
create a mobile app that lets members quickly schedule
appointments, pay bills and check histories. More than 40
percent of Oscar’s members use the app and website to
manage their health every month, and 43 percent of mem-
bers' first visits to a doctor are routed through Oscar.
Suncorp Group Limited, based in Australia and founded in
1902, is a good example of an insurer using new, digital-in-
spired applications to streamline its business. Five years
ago, it overhauled its insurance claims assessment process,