The Essential Guide to Cloud Computing in the Insurance Industry
- Cloud computing has been the foundational platform for the development of insurtech.
- Cloud-based claims administration, when combined with machine learning artificial intelligence (AI) and blockchain technology, improves fraud detection through a more dynamic analysis of insurance claim data.
- The future is here, and it requires new ways of thinking about how to deliver insurance solutions to consumers.
Cloud solutions are quickly becoming the norm for insurance companies. It allows insurers to more easily create, maintain, and manage their product portfolios while continuing to provide customer-driven service at lower costs.
This has given those who opt for cloud solutions for insurance a competitive advantage over traditional insurance companies whose legacy systems make many processes laborious and time consuming, thus limiting what they can offer customers.
If you’re an insurer looking into the idea of hosting insurance in the cloud, then chances are you have a lot of questions, like: Is it worth investing in? Is it safe for me to place my business and sensitive information in the cloud?
This article will cover everything you need to know about insurance cloud computing, from its evolution to the best practices, so you’ll know how to find the best cloud solutions for insurance and better serve your clients and customers.
A brief history of cloud technology
While cloud technology gained mainstream momentum in businesses at the turn of the 21st century, it has actually been around since the 1960s.
In 1963, the Defense Advanced Research Project Agency authorized $2 million for a project to develop a technology that allows 2 or more people to use a single computer at the same time. The resulting technology was cloud computing. As cloud computing improved over the decades, its applications started spreading beyond defence and into business and daily consumerism.
Originally, cloud computing for businesses and consumers focused on its ability to provide on-demand access to resources without installing any hardware or software onto the user’s local system. This meant that people could use applications and programs they never had before without having to install them themselves on the device’s hard drive.
The evolution of cloud technology has expanded to an array of other benefits as well. This change has given rise to new types of technologies with which developers can innovate their offerings massively with platforms like Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS).
What are the benefits of cloud computing?
Cloud computing provides many benefits to both individuals and businesses. It allows the use of scalable computing power, storage capacity, and other software without the need for on-site hardware.
These benefits have driven innovation in many industries. For example, individuals can enjoy cloud storage space and fast-streaming video content on the go, while companies can benefit from improved data management and business continuity.
Cloud storage is scalable and is available at a low cost, which is very useful for individuals that have multiple devices and for companies that use many different servers. Data security is also improved with this technology as data can be stored in different locations, ensuring continuity in case of an emergency.
How cloud computing drives innovation in the insurance industry
Cloud computing has been the foundational platform for the development of insurtech, which is a term that coins together the words “insurance” and “technology”. Insurtech has disrupted the insurance market by allowing insurers to offer more personalized rates and engage with customers on a new level.
Insurers that have adopted insurtech have been able to outperform traditional insurance industry giants by being able offer better deals at a faster rate. In addition to equipping insurers with the agility to rapidly respond to market needs, cloud computing has also enabled insurers to provide more customized solutions for their customers based on specific needs and requirements.
Here are some specific applications in which cloud computing can improve how you, as an insurer, can provide better service to your customers.
Cloud-based claims administration
With cloud claims management systems available as a SaaS, you can simplify and speed up how consumers make claims.
Through a cloud-based app, consumers can easily submit their claims and upload relevant documentation, such as pictures of receipts or photos of damaged items. You will benefit by eliminating laborious manual paperwork, resulting in faster claims processing for your customer.
Furthermore, cloud-based claims administration, when combined with machine learning artificial intelligence (AI) and blockchain technology, improves fraud detection through a more dynamic analysis of insurance claim data.
Without a doubt, you stand to save significantly when you have the technology to better detect fraudulent claims. According to the Coalition Against Insurance Fraud, insurers are losing over $80 billion a year to fraudulent claims in the US alone.
One of the most interesting rising trends in the insurance industry is microinsurance.
The primary goal of microinsurance is to provide access to affordable insurance coverage for people who are excluded from traditional supply. A secondary form of microinsurance is making it easy for consumers to sign up for insurance add-ons through the convenience of their mobile phones.
Let’s say for example someone is borrowing their friend’s car. Through their insurance app, they can sign up for a 1-day coverage to drive the car, without the hassle of signing stacks of paperwork and at a much lower price than being listed as a “named driver” in the main insurance policy.
Innovations in microinsurance have been made possible largely thanks to cloud computing. When you have cloud-based insurance software, you can significantly reduce overhead costs to allow for more affordable insurance coverage, as well as leverage mobile technology for your consumers to sign up for micro-offers.
Integration with other cloud-based industries
When you’re on the cloud, you can create new innovations by integrating with other cloud-based industries. Wearable healthcare and telemedicine are 2 prime examples that the insurance market has leveraged to create massive innovations.
As the wearable healthcare trend continues to grow and evolve, it empowers consumers to take charge of their own wellness. It also collects a lot of vital data on the cloud, from activity to heart rate variability, blood pressure, sleep quality and more.
Collaborating with wearable healthcare providers can provide you with more accurate insights to customize coverage and more exciting product offers with incentives and rewards. For example, some of the innovations we’ve seen on the insurance market are lower premiums for reaching certain health milestones.
This shifts the relationship you will have with your customers from “sick care” to “wellness care”, breaking the stereotype that insurers are cold and distant from their customers and don’t understand their needs.
Best practices of cloud solutions for insurance
There are a lot of myths surrounding insurtech and it can leave you wondering:
Is cloud computing safe? How do I migrate my data to cloud solutions for insurance without disrupting service for my customers? What about data security and cyberattacks?
At Cloud Insurance, we take these concerns seriously. That’s why we follow these best practices that make the transition to cloud-based insurance services seamless, easy, and secure.
Securing customer data
Cloud Insurance adopts these following best practices to secure customer data:
- Front End registration: CI Front Ends communicate via SSL encrypted HTTPS protocol to prevent data sniffing. All inputs are sanitized then validated. The delivered front ends are tested via Security Testing following the attack patterns and security risks recognized by OWASP.
- RDS security: The database is stored on a secure Amazon RDS instance with access restricted to a short IP whitelist. Each tenant connects with their own user to compartmentalize data and reduce risk in case of an attack.
- S3 policies: Documents are stored in private buckets with strict access control. Data at rest is always encrypted.
Regular security management
Cloud Insurance utilizes the security tools provided by Amazon (AWS) services, following its best practices. We are in the process of extending even more with such possibilities as AWS Shield, CloudFront, and Route 53.
To verify our delivered systems we have a Security Testing procedure that follows the OWASP guidelines to detect and eliminate security risks. We have done a third party review that is available upon request conducted by NetSecurity.
The overall goal of the penetration test was to prove the business risk of having these businesses available online, detect vulnerabilities and provide information on how to resolve the issue. No major issues were identified.
To ensure regular checks, we have a dedicated DevOps manager.
Multiple level combat of cyber risks and cyber attacks
We use VPN and whitelist IPs for accessing our infrastructure. All actions taken within our system are extensively logged. Access to infrastructure and different parts of the system is highly restricted and given on a need-to-use basis.
Cloud Insurance addresses the risk of cyber attacks on multiple levels.
- Our design and architecture is based on state-of-the-art technology that supports upgrades and support of known vulnerabilities.
- We have an organization that is dedicated to DevOps and keeps up to date with trends, new technologies and known risks.
- We do monitoring and have a deep set of logging of our value chain using the most modern cloud technologies that address potential threats in a preemptive manner.
- If a major attack were to happen, we would immediately activate a crisis team led by our CTO that would coordinate issues with our customers, and have full resources available from our team and supply chain.
Efficient data migration services
With AWS hosting, Cloud Insurance helps insurers migrate to the cloud seamlessly. By employing the best practices mentioned, you can rest assured that your data remains secure and safe on the cloud.
Are you prepared for the future?
The future is here, and it requires new ways of thinking about how to deliver insurance solutions to consumers. We may be entering an era where the digital divide will become less pronounced, as cloud computing offers an opportunity for more people to participate in the economy through the digital realm.
The bottom line? Cloud computing is here to stay for virtually every industry, including insurance. Thus, it is vital that you start adopting cloud computing and other insurtech solutions to keep up with the digitization megatrend that is changing every aspect of consumer’s lives.
About Cloud Insurance
Cloud Insurance is a seamless SaaS solution made by insurance experts for insurers since 2016. We feature all the aspects of the daily work of insurance providers, and help to reduce time on managing policies, claims, financials, and reports through APIs, AI, and rule-based technology. Learn more about us here>>.