Data-Driven Insurance Companies Need to Speed up Their Transition to the Cloud
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Data-Driven Insurance Companies Need to Speed up Their Transition to the Cloud

Kjetil S. Kalager, Head, Data and AI, Fremtind
Kjetil S. Kalager, Head, Data and AI, Fremtind

Kjetil S. Kalager, Head, Data and AI, Fremtind

The modern insurance industry must take its core processes from on-premise and move it all to the cloud for two reasons. First, the opportunities are many and the rewards are high. Secondly, if you want to lower your risk and survive in the longer run, you have no choice. Adopt or die. In Fremtind, a leading insurance company in Scandinavia, have we realised that we are in a hurry. The competition is tightening, the customers expect more, and technology is changing.

The game is stepping up

Today data and IT platforms are the blood and heart of any company in most sectors. In the insurance industry is it a numbers game. Few other industries are to such an extent data driven. Actuaries and mathematicians have for decades developed models and methods to create the right products to the correct prices balancing risk and income, demand and offers. The challenge is that expectation for user-oriented pricing and products does not scale with the growing volume of data and use cases. Thus, we need to be data-driven and able to deliver new offerings to the speed of lightning. If you are relying on your old on-site IT systems in your basement and have not moved to the scalable cloud platforms, you are in trouble.

The customers expect individualisation

Our customers expect custom made products and prices delivered in real-time. The new generation is doing almost anything in the digital world. When purchasing a car, a client wants the price offer instantly and get the wheels on the road immediately. And when an accident occurs, the client wants to take out the cell phone, fill in the forms on the fly, take a picture of the damaged part, and submit the claim without any hesitation. Then, if the claim is clearly legitimate, the client expects the repair to be taken care of without any hesitation. To do this, several processes must run in the background on the insurer’s platform. Data needs to flow freely, policies need to feed into the systems, assessments must filter out all risk-free claims, and the communication with the client must be relevant and timely.

Processing data in computers does not necessarily make us data driven

To meet new demands, the insurance industry needs scalable systems with completely new technology – perhaps as a service in the cloud. Your on-site system is built for your current processes. You need to self-disrupt and experiment and fail fast at a low cost, without investing in new on-site software and hardware. We need to modernise the way we work and convert to cloud-driven platforms. Only this way can we scale up, lower our risk, meet customer needs,and innovate for the future. If not, will you most likely be disrupted by new or existing competitors, and you will see lower margins and declining volumes.

It is more complex, but on the same time easier

Moore’s law tells us that every second year the computers are doubling their capacity to the same cost. As a result of this the information we collect has reached such a volume that we are not able to process it. At the same time has the innovation within storage, platforms, software, machine learning, service, and product offerings propelled. The computes are cheaper and better. You do not need to buy hardware or software; you can rent it and you can scale it up or down when you need it.

  Today, data and IT platforms are the blood and heart of any
company in most sectors   

 

If you still have your legacy systems from the past, you most likely are spending more time on keeping them running, building up technical debt, and you spend less time on innovation and development. Are you reliant on an on-premise system, must you ask for how long these systems are supported? If end of life is in a few years’ time, are you in trouble – again. You must act now and plan for a transition to the cloud.

Digitalisation does not necessarily mean that you are data driven

Being data driven is more than having your processes in a computer. If you still are reliant on manual intervention, you need to automate as much as possible and let the computers do the work, while humans handle the exceptions. Most likely will you have to automate more; from data processing, data modelling, operations, and to governance. To do this do we need to move away from labour intensive and highly specialised coding to no-code and low-code. We need to democratise data and data science. This means we need to train and re-educate our staff and make them future ready.

It is fun

The new generation of employees expect to work with new technologies and processes. Old systems on old technology will be phased out, and the experts on these systems will die out with the systems. The great thing with cloud technologies is that it is fun. It attracts talent and spirals new development and business innovation. Build your platforms and models in the cloud and focus on with investing in your employees with training and skill building.

The cloud transition is NOT driven by technology

All right; technology is important to get to the cloud. However, the transition is on many other levels as well. Culture eats strategy for breakfast, and getting the organisation on board, engaged, and involved in the transition is the toughest task. To be successful with cloud transition, the organisation must anchor the strategy from the very top in the organisation and down to the teams that are going to do the work to get to the promised land. Everything in the organisation must change; processes, systems, technology, culture, and people. This takes time. If you have started, congratulations. If still are struggling to get going, good luck, you are already late.

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