Half of insurance firms think software-as-a-service (SaaS) will transform the industry within five years, according to a recent survey by research firm Ovum.
The use of SaaS in the global insurance industry is already significant, with at least one third of insurers fully deploying or trialling SaaS, according to Ovum. Despite a “significant minority” of insurers remaining cautious of SaaS (for regulatory, risk and reliability reasons), there’s almost universal agreement among insurance carriers that SaaS will have a significant impact on both the industry and individual insurers within the next five years, Ovum says.
Ovum’s principal insurance analyst Charles Juniper provides three key recommendations for insurers as they begin their SaaS deployments.
First up: SaaS strategies must incorporate benefits beyond just cost reduction. Ovum thinks most cloud strategies in the insurance industry today need to be more comprehensive and more fully encompass the potential for organizational transformation.
“In planning their SaaS strategies, insurers must focus on the transformative role SaaS can have on their organization in the context of wider industry change,” Juniper said in a statement. “SaaS and cloud technology can play a critical role in supporting an insurer’s overall business goals and in supporting its wider ambitions whether that includes new products and services, regional expansion or entering completely new sectors.”
The second insight: Insurers plan to adopt SaaS within the next 24 months. As SaaS becomes increasingly mainstream, all insurers must have a clearly defined and widely internally communicated strategy for SaaS and cloud, Juniper said.
Finally: IT groups should look to evolve toward a “SaaS broker” model. “One of the consequences of SaaS adoption is that the IT function of many insurers will need to undergo significant change in their role and structure, and this is likely to give rise to some challenges in terms of change management,” Juniper said.