The insurance industry has reached a pivotal moment in its digital transformation journey. Cloud platforms have emerged as a game-changing technology that is fundamentally reshaping business operations across the entire sector.
It’s easy to see why: Unlike traditional on-premises systems, which can often hold companies back, cloud technology is empowering insurers with the scalability, efficiency, and innovative power needed to drive true competitive differentiation and growth. It’s no surprise, then, to learn that P&C Insurance industry adoption of the cloud has increased from 29% in 2020 to 85% in 2023. And increasingly, insurers are embracing cloud-native SaaS (software-as-a-service) solutions in that transformation—helping them enhance their speed and agility in response to evolving policyholder demands and rapid technological changes.
In this blog post, we break down the key benefits insurers are realizing in their journey from on-premises to the cloud—and how cloud-native SaaS solutions are shaping the future of the insurance industry.
4 Benefits of Migrating to a Cloud-Native SaaS Solution
The move from on-premises to the cloud can revolutionize the way insurance companies operate, enabling them to reimagine their processes, enhance customer experiences, streamline operations, and tap into cost savings. Here’s a look at four big ways modernization is reshaping the way insurance companies do business.
1. Benefit from the Most Current Upgrades—Without Dedicating Time and Resources
Migrating to the cloud and adopting a SaaS solution opens the door to continuous deployment. This means your business can benefit from system changes that are released and applied automatically into the production environment through the cloud.
This is in contrast to a traditional deployment environment on-premises, where an upgrade cycle is often a manual, tedious, and time-consuming process. These upgrades may occur as often as once per quarter or even once or twice a year. And when those upgrades do occur, it often requires your IT team to pause business-critical initiatives to focus on putting those changes in place.
The traditional deployment environment inherent with an on-premises system can ultimately become a costly and time-consuming task that often adds complexity for resource-constrained teams, hampering the insurers’ ability to instead focus their efforts on driving innovation, new product releases, and more.
The opposite is true of a cloud-based system with continuous deployment. The system is constantly maintained by a third party at a fraction of the cost and effort it would take to execute upgrades in an on-premises environment. Aside from typical testing and final deployment, this helps to free your IT team to focus on innovation rather than traditional maintenance.
Continuous deployment also means that your system is always up to date—helping you take advantage of the new features and capabilities (including important security updates) you need, when you need them, to drive business growth and deliver a superior customer experience.
2. Increase Speed and Productivity Across Multiple Lines of Business
When it comes to the product development cycle of on-premises environments, testing, coding, automation, debugging, and building is all done in a singular space—ultimately slowing down the process and delaying deployment.
When product development is done on a cloud-based platform, however, that work is broken up into different environments, where building and testing of different features can be done simultaneously—without affecting other aspects of the product. This leads to a decentralized product development cycle, which moves quicker because the work can be broken up, built, tested, and completed more flexibly.
This cycle helps insurers launch new products faster, ensuring they’re meeting—or even staying ahead of—evolving market and customer demands. For example, by applying continuous deployment best practices to their products, insurers can make the most of new product and security features because the system is as up to date as possible. Those benefits then get passed on to the customer through a better, more secure experience.
Cloud-based environments also empower insurers to leverage business-critical insights in real-time, helping them make faster, more informed decisions. That’s because a native cloud SaaS environment allows for the integration of analytics and machine learning tools, which can improve underwriting and access risk.
3. Easily Scale as Business and Demand Grows
In a traditional on-premises system, as your organization and its operations grow, your hardware needs to grow alongside it to handle the increasing demand. And along with that growth, comes increasing costs—from the upfront hardware investment and ongoing maintenance to the resources needed to oversee and run the on-premises tech.
In a native cloud SaaS insurtech environment, however, you can scale up or scale down a cloud environment as needed to meet changing demand—almost instantly, without the need to invest in lengthy upgrade cycles. This means organizations don’t have to spend weeks or months overhauling their infrastructure as they would with on-premises solutions. In most cases, a third-party provider will also likely cover the logistical cost of managing hardware and software and provide the necessary amount of space in the cloud for the insurer’s operations.
4. Stay Current with Evolving Cybersecurity Best Practices
More than 70% of data breaches occur in on-premises environments, with only about 24% involving cloud assets. This indicates that a significant majority of breaches still happen with on-premises systems.
Put simply, a cloud-based environment ensures you’re more protected against cybersecurity threats. Here’s why: On-premises solutions require manual intervention, and security teams must initiate security assessments and testing. This can make it easy to fall behind on security best practices, as any lull in a system upgrade can leave your organization vulnerable and susceptible to a cyberattack.
Cloud security solutions, on the other hand, offer centralized visibility, continuous monitoring, and regular vulnerability assessment. In a cloud-based environment, part of continuous deployment involves updating security protocols automatically as soon as they are ready. This means your organization will always have the most up-to-date security practices in place, ensuring your sensitive business and customer data is protected.
How to Ensure Cloud Transformation Success
It’s important to note that there are many pathways to adopting cloud technology—and the route you take can impact the outcomes your business will realize.
Here’s why: If insurers simply migrate or ‘lift and shift’ existing applications and IT infrastructure to the cloud, they still need to invest dedicated staff, resources, and expertise to handle maintenance, upgrades, and ongoing management—just as they would on-premises. This is a costly endeavor that adds complexity for many resource-constrained teams, hampering the insurers’ ability to adopt AI and other transformative technologies.
To tap into the true power of the cloud and all of the benefits that come with it, insurers should consider moving to a cloud-native SaaS solution that will allow them to fully harness the cloud’s scale, efficiencies, and innovation technologies to streamline the insurance lifecycle—from policy administration through claims, billing, payments, and more. By choosing SaaS over self-hosting (either on-premises or in the cloud), they can avoid hefty infrastructure costs and management and empower teams to focus on priorities that will drive growth and deliver value to shareholders and policyholders.
That’s why, if your business is looking to move off its current on-premises system and explore a true path to modernization, it’s important to know what to look for in a solution. Fortunately, insurtech providers can partner with your organization to fully support your transformation and ensure you’re leveraging the right platform.
Our eBook, 7 Questions Every P&C Insurer Should Ask Before Investing in Cloud Software,” will help you navigate the process of selecting the right solution—so you can jumpstart your transformation. Download the eBook to discover the key criteria you should consider—including system management/upgrades, scalability, data and reporting, software development, and more.
