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Unlocking the Power of the Cloud in Insurance with Earnix and Guidewire

Earnix Team

2. November 2023

  • Pricing
  • Transformation

Insurers Lag in Getting Their Heads into the Cloud

In our conversations with insurer pricing teams, actuaries, and underwriters, we often come away wondering why the carrier world is not further along in fully embracing cloud technology in these areas of the business.

Cloud computing is now accepted practice in many areas of insurance company operations. Website hosting, customer relationship management (CRM), sales and marketing automation, customer portals, payroll, employee benefits, and most other business functions are now routinely deployed using Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) strategies and architectures.

To these other insurance functions, their technology is just as mission-critical. It’s time for pricing, rating, and underwriting to fully embrace the cloud as well, for the benefit of customers, partners, and the business.

In addition to the benefits it brings to all these stakeholders, we’ll see that some capabilities, such as personalization and customer engagement, are increasingly impossible to achieve without leveraging the cloud, connecting to partners, and building a robust ecosystem to meet customers whenever and wherever they want to engage.

Customer Focus as a Driver for Insurers Shifting to the Cloud

Customers and prospects are perhaps the biggest winners when insurers embrace the cloud. Using cloud technology gives customers an array of new choices, replacing their previously-limited set of purchasing options. They have access to innovative new products, and new ways to acquire them. With the employment of cloud-based solutions, customer choice has exploded, sparking a wide set new benefits:

  • Increased access to highly-personalized offers and the best/most economical insurance options

  • “One-stop shopping” opportunities (e.g., embedded insurance and other complementary insurance and financial products)

  • Better/more responsive account service and attention, including claims management

  • Self-service 24/7/365 access to account information, for ease of customer support, policy renewals, updates, changes in coverage, etc.

These compelling benefits are driving insurers to look to the cloud for every customer-facing application. It’s a matter of providing the best possible customer experience (CX), and an important competitive weapon.

Opening Up a World of Partners

Customer demand for ready access to a full slate of financial products has forced insurers to broaden their horizons and their product sets to include an array of partners and partner products in their ecosystems.

PwC, among others, points to the value that insurers can reap from broadening their partner networks to capture and maintain customers. Cloud technology is key to broadening these networks.

Partners also stand to benefit from their associations with insurers who have embraced the cloud in several ways:

  • Easier, quicker connection to new business and revenue opportunities

  • Cooperative marketing and cross-selling (e.g., embedded insurance and embedded banking)

  • Brand building and brand engagement from associations with established insurance players

  • General ease of doing business

Insurers Reap Big Cloud Benefits, Too

When customers, prospects and partners are happy, insurers reap the benefits.

“Top line” insurer benefits are numerous:

  • New revenue opportunities – the ability to sell additional products and services, including those delivered through partners

  • Higher prospect conversion rates through presentation of highly-personalized offers

  • Customer experience (CX) improvements and customer engagement (CE) enhancements

  • Additional customer retention, upsell, and cross-sell opportunities

As McKinsey puts it, “Insurers that use the cloud effectively can unlock such desirable capabilities as providing omnichannel experiences for customers, developing a diverse portfolio of integrated services, and rolling out solutions at unprecedented speeds.” [this could make a good “pull quote”]

The cloud can also deliver significant operational and financial benefits, leading to “bottom line” improvements:

  • Lower cost to serve customers

  • Access to new capabilities such as artificial intelligence (AI), machine learning (ML) and advanced analytics in record time

  • Infrastructure and application update cycles measured in days, not weeks or months

  • Access to broader, more available staffing sources and talent

  • Data security and cyber resilience that is often better and more cost-effective than “on-prem”/in-house capabilities

  • Faster fraud detection in claims activity

  • Moving ever-escalating CAPEX commitments and the pain of expanding capacity in-house to a more predictable, lower-cost OPEX model and simple, automatic upgrade processes

  • Rapid expandability and scalability, without lengthy procurement processes and delays

  • Greater organizational agility and the ability to react to changing market conditions, competition, etc.

Perceived Cloud Barriers

With all these benefits to everyone constituency in the insurance ecosystem, why are some carriers lagging in their cloud migrations and deployments?

Why are the key functions of underwritingpricing, rating, customer engagement, and personalization among the last to move to the cloud? Are there legitimate technology or market reasons? Or are there misconceptions that need to be overcome?

The concerns cited most often involve costs, cybersecurity, and regulatory compliance.

Cloud Economics

Many internal discussions about the cloud begin with attempting to justify migration as a way of reducing IT costs. Indeed, in some cases the cost reductions alone may justify the change, as the cloud utilization can reduce or eliminate CAPEX commitments, move expenses into a predictable OPEX flow, allow IT staff to be re-deployed to more productive work, and cut costs overall.

But, as pointed out by McKinsey, relying on cost reduction alone misses the point – that the biggest benefits of moving to the cloud often lie in other areas - in the ability to:

  • drive incremental revenue

  • increase customer satisfaction

  • make the business more competitive

As they put it, “The most important thing to understand about cloud, however, is that it’s not a more efficient way to operate IT, but a force multiplier for generating value for the business.”

Cloud Security

Early versions of some cloud providers’ cyber protection were admittedly less than acceptable to a security-conscious industry such as insurance.

In the meantime, though, cloud providers have acknowledged the overwhelming need for tight security, and have invested billions of dollars in software and people resources to beef up their cyber capabilities, to the point that many cloud solutions are judged more secure than corresponding in-house/on-prem systems.

Cybersecurity in the cloud has matured to the point at which Gartner projects that by 2025, 99 percent of cloud security failures will be due to issues on the customer’s end, rather than the cloud security provider’s.

They advise that “CIOs must change their line of questioning from ‘Is the cloud secure?’ to ‘Am I using the cloud securely?”.

Meeting Regulatory Requirements

In a highly-regulated industry such as insurance, compliance goes hand in hand with information security. Insurers typically have a sizable regulatory compliance team monitoring all aspects of the business.

Suffice to say that your organization is most likely already familiar with, and in compliance with, a vast array of regulatory standards, and so are your potential hosting partners. Analyzing and ensuring compliance may not be the “heavy lift” you initially anticipate, and should not pose an insurmountable barrier to making more extensive use of the cloud.

Getting IT On Board

One common lament among the insurers we speak with is that they perceive IT will be resistant to using the cloud, for the reasons cited above, as well as fear of loss of control over the applications they are tasked with managing.

You might be surprised to find a reasonably receptive audience among IT executives. Long gone are the days when the mission of an insurer’s IT team was to simply “keep the lights on,” making sure a slate of on-premise (“on-prem”) applications is up and running.

In today’s world, carrier IT teams are instead charged with being the orchestrators of a strategy for Intelligent Insurops, a partner in meeting the insurer’s objectives, a key teammate in helping to achieve business goals such as driving new customer acquisition, improving customer retention, increasing revenue, controlling costs, and expanding distribution channels.

Making It Happen

If you’re just beginning a cloud migration, or are not as far along as you would like, here’s a basic framework for transitioning to the cloud.

Step 1:  Commit to Agility

Agility is both highly-sought-after and absolutely necessary across multiple business and IT disciplines, including the cloud. Agility comes in the forms of organizational nimbleness and a flexible technology foundation, building a culture and an infrastructure that are modular and adaptable.

Step 2: Make Friends with Application Programming Interfaces (APIs)

The architectural lynchpin of the cloud is the application programming interface, or API. APIs allow software components from multiple, independent suppliers to interact and exchange information. APIs allow full solutions to be assembled that are agile, modular, and intelligent, so that specialized functionality can be brought to bear, regardless of the provider.

One shining example of this capability can be found in the Earnix Price-It for Guidewire Accelerator, which provides a streamlined, seamless connection between these two industry-leading solutions, simplifying the development process and speeding time to market.

Leveraging Guidewire's Integration Gateway, insurers who have technology from both companies, and potentially other complementary applications, can build fully-capable solutions in much less time than attempting to build their own applications or integrate from scratch.

The result is that insurers can create an intelligent layer that connects existing systems, new technologies, and diverse teams to deliver more focused and highly-flexible solutions.

Step 3:  Develop Your Own Unique Cloud Strategy

There is no single path or “one size fits all” approach. Each organization and each starting point is unique, and each migration plan will be as well. No matter where you are today, you will need to prioritize, plan, and execute.

Not every legacy application is a candidate for cloud migration. Billing, account servicing, financial reporting, and others often fall into this category. They can be accessed from cloud-based applications through methods such as containerization, service architectures, etc. The API is a key component of this strategy.

The architecture you end up with will likely be a combination of still-useful enterprise applications, new cloud-based ones, and an intelligent layer that connects the two sets of functionality.

Plotting the strategy is not a “one and done.” It will be revisited as business conditions change, technology evolves, and internal resources mature.

Some key decisions that will need to be made in developing and evolving your cloud strategy: 

  • Which applications to move to the cloud, in what sequence, over what timeframe

  • Data modernization and reorganization

  • Agile management strategies

  • Cyber policies and management

  • Connecting to partners and managing partner-connected technology jointly

Step 4:  Let Guidewire and Earnix Help Drive Your Cloud Technology Initiatives

As we discussed above, partners, both internal and external, are key to cloud success. When it comes to those mission-critical functions that you may have resisted moving to the cloud, Guidewire and Earnix have partnered to help you make the move as quickly and efficiently as possible.

Our combined technology solutions can help insurers migrate to the cloud with capabilities in several key areas: 

  • Seamless integration of Guidewire’s industry-leading core policy admin system with Earnix’s best-in-class rating engine

  • Data analytics and machine learning (ML)

  • Personalized product delivery

  • Underwriting, pricing, rating, and personalization

  • Customer engagement solutions

Summing Up

Now is the time to seize the cloud technology opportunity. It’s your chance to bring-world class capabilities to your insurance business. And, Earnix and Guidewire have partnered to deliver these solutions with speed, efficiency, and cost-effectiveness.

To Learn More, Join Us at Guidewire Connections 2023

Join Earnix and Guidewire as we lay out solutions that will help propel additional revenue, customer acquisition, and profitability at Guidewire Connections 2023, November 12-15 at Gaylord Opryland in Nashville, TN.

Among the many thought-provoking sessions scheduled, a number of them deal directly with cloud deployment, best practices, and adoption:

  • Monday, November 13 - Guidewire Connections Opening Keynote (8:30 – 10:05 AM CT)

  • Monday November 13 - Cloud Migration Primer: Essential Strategies to Ensure Success
    (1:15 - 2:00 PM CT)

  • You’ll especially want to be sure to attend the Earnix demo session, as we showcase our "Ready for Guidewire" offerings -- 12:50 - 1:10 PM CT in Ryman Hall

See you there!

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Earnix Team