Driving growth through insurance modernization

The findings from a 2023 Forrester survey revealed that insurers have yet to tap into the full potential of cloud technology. In fact, 58 percent of insurance industry survey respondents reported that their organizations do not have modern technology infrastructures.

I recently hosted a webinar titled Drive growth through insurance modernization to explore cloud technology’s role in the future of insurance. Industry leaders from Forrester, Hyland, Montoux, and Unqork joined me to share their experiences with modernization and discuss Forrester’s findings on the topic.

In this post, I highlight the trends that Forrester presented along with several of the panelists’ unique insights.

Insurers are bullish on modernization, but the industry isn’t there yet

Ellen Carney, Principal Analyst for Forrester, started the webinar with results from her company’s survey of 618 insurance industry decision makers. AWS Marketplace commissioned the survey to evaluate the benefits of modernizing core applications and technology infrastructure.

Forrester’s research shows that modernization can help insurers rapidly adapt core technology, generate data and insights, and bolster security. The research also shows that the industry has not yet achieved modernization. Read on for a sampling of the findings that led to these conclusions.

Key finding: Insurers expect positive returns from cloud technology investments

Survey participants anticipate cloud technology will bring improvements to the following areas of their organizations. The following image shows the question and responses:

“What kinds of benefits do you expect from investing in cloud-based technology?”

Improved data quality – 52%
More efficient operations processes – 47%
Improved real-time communications – 45%
Improved security – 43%

Base: 618 insurance decision-makers at global enterprises
Source: A commissioned study conducted by Forrester Consulting on behalf of AWS, April 20

Additionally, participants expect these benefits to translate into improved customer experiences and insights, revenue growth, and increased innovation.

Key finding: Infrastructure immaturity is dampening progress

While there is industry-wide buy-in for modernization and its benefits, many insurers lag in delivering modern technology solutions to reach their business outcomes. Only 42 percent of respondents said their organization’s technology infrastructure is modern. Fifty-three percent report mature data and analytics capabilities, which, according to Carney, are essential to driving insights and supporting emerging artificial intelligence (AI).

Insurers are turning to cloud solutions for help with modernization, but 31 percent are unsatisfied with their cloud technology stacks. And 25 percent of respondents stated their cloud journeys are progressing more slowly than planned.

Q&A with insurance industry leaders

Following Carney’s readout, three industry experts joined the conversation to share how Forrester’s research results aligned with their experiences. All three are leaders at companies that provide cloud-based financial services solutions in AWS Marketplace.

The Q&A touched on various aspects of cloud technology in insurance. View the Drive growth through insurance modernization webinar to hear the full panelist discussion.

Read on for some of the key points from the conversation.

Q: Every company acknowledges the need for modernization, but so many are lagging. What can you share about the leading causes for inaction?

A: Stephen Comer, Assistant Vice President of Financial Services & Insurance, Hyland

“It’s a great question. I think there are actually numerous answers we could potentially dive into. One of the biggest things that I still see is the presence of fear over general control in a highly regulated industry. Individual organizations still want to have control over the information, the data that they’re collecting to make sure compliance with regulatory initiatives is being met. And there is a release of that control when you deploy to a cloud environment.

“It requires an extensive amount of due diligence to ensure your cloud partner is going to check all those boxes for you. Especially in insurance where your business’ risk tolerance is more risk averse, which means fewer and smaller steps get taken. So I think the element of control still hinders a lot of people from moving fast.”

A: Farooq Sheikh, Global Head of Insurance, Unqork

“If you look at how insurance companies are put together with emphasis on control infrastructure, on mainframes, on a number of technology elements that take a very significant amount of time in maintenance––that is the key issue that we’re seeing continuously around the lack of adoption.

“Consequently, today, most insurance companies are thinking about maintenance, batching, upgrades of legacy technology while they continue to think about how, when, or if to move towards more serious adoption of future fit capabilities and cloud broadly.”

Q: What’s driving the change in attitude of life insurance carriers toward modernization?

A: Geoff Keast, Chief Executive Officer, Montoux

“If you look across the financial services spectrum, one of the big drivers for change has generally been customer behavior. If we look at retail banking as one of the first examples, modernization was primarily driven through customers wanting to engage with their banking institutions through digital means.

“If you look at the way life insurance is typically bought, it’s still done predominantly through in-person relationships. The consequence of that has been that insurers, life insurers specifically, haven’t needed to upgrade their technology. Now, a lot of Western countries have aging populations, which means that you’ve got many more digital natives who are going to be requiring life insurance policies. And those digital natives want, as the name implies, a much more digital experience. This changing consumer behavior means that life insurers, who have typically been one of the last to work through significant modernization or transformation, are now trying to serve those customers in a much more digital way and their infrastructures are not able to support that.”

Q: As an overall business priority, where does data and analytics stand?

A: Ellen Carney, Principal Analyst, Forrester

“A little bit earlier in my talk track, I talked about the fact that [data and analytics] have been the number one inquiry we have gotten from insurance organizations since 2009. With the exception being in 2021, when cloud was the number one inquiry. So they go together pretty nicely I think in terms of priorities for insurance organizations.

“Improving access to data and analytics, better data migration, security––all are at the top of the list when it comes to how we treat our proprietary business data and our customer data.”

Q: What part of the tech stack should be high priority for modernization?

A: Geoff Keast, Chief Executive Officer, Montoux

“All of it! Because we are dealing with a much more dynamic customer and a lot more volatility, anything that can help them [organizations] change to different capital market dynamics, product dynamics, or whatever it might be [should be high-priority].

“I believe that modernization really needs to look at how the technology can support being able to more rapidly deploy products that have value to customers. That could be everything from the digital component, to financial projections, to standing up a new product on a core platform, or a policy administration system.”

A: Stephen Comer, Assistant Vice President of Financial Services & Insurance, Hyland

“Everything starts with transforming the experience, and then that waterfalls down to external experience, internal experience, which trickles down to eventually bottom-line revenue.

“When you’re evaluating that tech stack, anything and everything is up for debate if it improves that experience.

“So when it really does come to making those broad, sweeping changes, I’m going back to what Geoff said: ‘All of it!’ Everything should be evaluated because there is really no piece of the tech stack that could be off the table when you’re looking for that transformation.”

About AWS Marketplace and next steps

How can you begin addressing challenges such as those discussed in the webinar?

AWS Marketplace has a wide variety of financial services solutions to help insurers modernize their infrastructures. AWS Marketplace is a curated digital catalog that makes it easy for customers to find, buy, deploy, and manage third-party software, services, and data. It offers quick, easy, and secure deployment, flexible consumption and contract models, and streamlined procurement and billing operations. More than 330,000 organizations large and small use AWS Marketplace monthly to accelerate digital transformation and improve efficiencies across their enterprises.

Independent research from Forrester estimates it takes half the time to find, buy, and deploy a solution through AWS Marketplace compared to other sales channels.

Visit Financial Services Solutions in AWS Marketplace to learn more about the financial services industry (FSI) cloud solutions available in AWS Marketplace.

To learn more about the topics discussed in this post, view Drive growth through insurance modernization.

Author bio

Shaheen Kanda is the Financial Services and Insurance leader for AWS Technology Partnerships. Before joining AWS, she founded two fintech startups and spent a decade working as a leveraged finance banker in New York City.