With all the buzz around ChatGPT and generative AI, it’s important to remember that cloud is the underpinning. Insurers will need to replatform by migrating to the cloud to enable innovation and growth through these new and emerging technologies. At the same time, they are taking a hard look at their legacy blocks to determine the business value of converting them. Doing so opens the possibility to decommission the legacy systems and reduce their technical debt. Some carriers are using their company’s enterprise cloud initiatives, while others are taking a hosted approach that lets them accelerate product innovation. Still others are going a step further and leveraging their own DevOps team to host and manage their policy administration system (PAS) instance. A common thread among these carriers is replatforming to the cloud, which has helped them unlock value by strengthening their digital cores and the capabilities they enable.
Replatform for flexibility, innovation and growth
For example, one leading insurer used its company’s enterprise cloud migration to also modernize its core policy administration system (PAS) and migrate it to the company’s AWS cloud. The move provided the flexibility the company was looking for to better serve its customers’ needs through product and service innovation. Within one year, the carrier consolidated decades of product innovation—an insurer’s “secret sauce”—from its four legacy platforms onto the new PAS in the cloud. In addition to reducing their tech debt, they are now able to build, test and launch new products at scale—a competitive advantage in meeting consumers’ rapidly changing needs.
Cloud flexibility addresses changing business needs
But what about the changing needs of the business? With many insurers offering multiple lines of business, each with differing priorities, cloud flexibility is helping them better manage operating costs and leverage skilled resources. Take a Tier 2 multiline carrier, for example. They have their own AWS instance along with an enterprise team of DevOps people making sure the right technologies are in place across the enterprise and that they’re used appropriately. Additionally, the team responsible for the core PAS has its own DevOps team that manages specific instances of the PAS and supporting platforms such as .net and OpenShift, along with classic WebSphere JBoss. Simply put, they plug whichever vendor’s platform they choose into their PAS. And their PAS uses a containerized architecture, which enables them to take advantage of a platform-as-a-service model to scale efficiently and effectively.
Cloud for business agility and competitive advantage
Cost isn’t the only factor insurers are considering in their cloud migrations. According to an Aite-Novarica report, insurers place less emphasis on reducing costs in their cloud strategies. Instead, they are looking at the business agility and new capabilities cloud provides. These factors can provide a much larger competitive advantage, especially when a strong digital core, underpinned by cloud, is combined with data and AI, as evidenced by our recent Total Enterprise Reinvention report. That’s where insurers can truly harness cloud power. We’re seeing this flexibility play out in the form of new and innovative products launched through new distribution channels, expanding insurers’ market footprint.
So, while insurers continue to evaluate the feasibility of migrating legacy blocks to alleviate some of their technical debt and reduce costs, they’re also harnessing the power of cloud to drive new opportunity. See how three life insurers are approaching cloud in our Future-ready insurers webinar.
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