Cloud Technology: Key to Digital Transformation in Insurance Sector

In the post-pandemic era, businesses, especially in the insurance sector, are under pressure to innovate and meet the rising digital expectations of customers. Traditional insurance operations often struggle to provide a fully digital experience, facing challenges in various areas like underwriting and claims processing. The key to overcoming these challenges lies in delivering superior customer experiences and operational excellence.

The average Net Promoter Score (NPS) of the banking and insurance sectors was between 26 and 31 in 2022, with new-age players like Lemonade achieving higher scores due to their superior customer experience enabled by cloud technology. Traditional banks and insurers are trying to leverage their scale to boost customer experience and NPS scores but face challenges in personalization and seamless multi-channel engagement.

Cloud technology is pivotal in this transformation. It drives customer satisfaction, innovation, productivity, and scalability. A recent Capgemini report indicates that cloud migration in financial services has surged from 37% in 2020 to 91% in 2023. In the P&C insurance sector, 85% of companies now use cloud technology, a significant increase from 29% in 2020.

Companies in the insurance sector are at different stages of cloud transformation: ’aspiring’, ’mature’, and ’innovative’. In the aspiring phase, insurers explore cloud technologies while maintaining digital access to customer policies. In the mature stage, there is strategic integration of cloud capabilities, leading to improved customer retention and satisfaction. The innovative stage sees insurers embedding the digital ecosystem into every facet of their operations, with the cloud acting as a catalyst for transformation.

Examples like AXA Mansard Insurance show the benefits of a cloud-based platform in enhancing customer experiences. The insurance industry’s journey through cloud maturity is not just a technological evolution but a strategic shift towards remaining relevant and competitive in a rapidly changing landscape. As stated by an industry executive, ‘Without cloud, there is no future for financial services firms,’ highlighting the essential role of cloud technology in the sector’s future.