Cloud is the New Business

  • 15/09/2020  |
Cloud is the New Business

During the lockdown, it allowed insurance companies to remain open and to continue their activities. And now the sector is finally understanding its full potential.

For all the negative effects that it’s had on our daily lives and on business, at least one positive thing may have emerged from the chaos of the coronavirus emergency: a greater understanding in the insurance sector of the full potential of cloud computing.

Cloud computing is the on-demand delivery of computing services – things like storage, databases, servers, software, analytics and computing power – over the internet. It relies on the sharing of resources to offer faster innovation, flexible resources, and economies of scale, and as you typically only pay for the services you use, it helps lower operating costs and makes infrastructure management more efficient.

But while sectors such as telecommunications and power have been quick to exploit the opportunities cloud computing offers, the insurance industry has been dragging its feet: although 82.4% of insurance companies already make use of cloud-based IaaS (‘Infrastructure as a Service’) and 70.6% make use of SaaS (‘Software as a service’) solutions, previously they’ve only ever been adopted to handle marginal aspects of the business and never for its core activities.

The cause of this diffidence may be the culture of the insurance industry itself. Insurance companies are used to using bespoke applications, and migrating to cloud models – with the higher levels of standardization that inevitably implies – can trigger resistance. In fact, research shows that the perceived rigidity of platforms and the difficulties of customising systems offered by providers continues to represent the main obstacle to the adoption of cloud solutions for core applications in the insurance business, followed by the difficulties of migrating over to new operating models and a lack of relevant skills and competences.

But as the pandemic has forced companies to finally embrace smart working, with employees moving from their desks in the office to the tables in their kitchens and data and applications moving from in-office computing systems to the cloud, it has also shown them the full potential of cloud computing. Whereas it was previously seen simply as a driver of digitalization, during the lockdown, cloud computing allowed companies to remain open and to continue their business, shifting the perception of it from an abstract innovation issue to a practical tool for managing and developing the industry’s activities.

This growing awareness among management of the opportunities cloud computing offers may be the push the insurance business needs to break down the cultural barriers which have been holding back the adoption of the cloud – especially important, given that vital new technologies like the Internet of Things and artificial intelligence are entirely dependent upon cloud systems.

According to Rossella Macinante, practice leader at IT market intelligence company Netconsulting cube, the issue is that the cloud is no longer simply a question of technology but one of good business. “(Cloud computing) allows you to accelerate the pace of innovation and offers the ability to launch products onto the market at a speed which is impossible with traditional systems,” she says, adding that it facilitates the provision, “in a constant and almost simultaneous manner, of high-level services in all markets in which the company operates” – a particularly attractive feature for large organizations with an international presence.

Experts predict increasingly widespread adoption of cloud technology across the board in the near future. A survey carried out by Netconsulting cube in 2019 showed that the Italian cloud market was at the time worth roughly 3.3 billion Euros and presented prospects for considerable growth, which it forecast as being up to 4.7 billion Euros over the coming years.

With all these factors in mind, it seems more than likely that the exposure to the cloud’s charms that the insurance business has experienced over the last six months will help make that figure even higher.

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