Advantages of Cloud-Based Policy Administration Systems

  June 2024       InsurIQ Team

You’re considering moving your insurance policy administration to the cloud. Making the switch to a cloud-based policy administration system provides many transformative advantages over maintaining legacy on-premises systems. As you evaluate options, keep these benefits in mind.

Easy Scalability That Grows with You

One of the biggest advantages of cloud-based policy administration systems is easy scalability that aligns with business growth. With an on-premises system, if you gain more customers and need to support more users, you have to purchase more servers and software licenses. This requires significant upfront costs and lead time to scale hardware infrastructure. With a cloud-based system, you simply pay for the computing power, storage, and capabilities you use each month. If you gain more customers, you can scale up instantly without huge hardware investments. The cloud-based policy administration system handles this seamlessly behind the scenes to expand capacity.

Built-in Resiliency for Peace of Mind

Cloud platforms offer built-in backup, failover, and disaster recovery capabilities that are superior to what most organizations can provide on their own. Leading cloud providers have data centers around the world, so your data is always replicated in multiple geographic regions. This means your cloud-based policy administration system can withstand catastrophic events like natural disasters, power outages, and hardware failures due to having centralized data. You gain peace of mind knowing your critical systems have redundancy to support continuity if disasters occur. On-premises systems typically require extra investments and complex configurations to achieve similar resilience. For most insurers, this is cost-prohibitive and operationally impractical to address vulnerabilities to isolated threats.

Automatic Software Updates That Increase Security

Maintaining and updating traditional on-premises software is complex, risky, and requires significant manual efforts. With a cloud-based policy administration system, the cloud provider handles all updates seamlessly behind the scenes. You always have the latest software version with the most current features, security patches, and stability fixes. Finally, it hardens security by fixing vulnerabilities faster than manual update processes prone to lagging behind.

Cloud Security Exceeds On-Premises Capabilities

Despite common misconceptions, critical systems hosted in the public cloud are often more secure than on-premises infrastructure maintained by organizations themselves. Leading cloud providers have robust physical and virtual security measures that are audited constantly to meet rigorous third-party standards. They also utilize encryption, tokenize data, monitor systems 24/7 to detect threats, isolate customer data and apps, and incorporate advanced security innovations.

Work From Anywhere Access for Today’s Business Realities

The work landscape has changed dramatically in recent years. Employees and external partners need to access systems from anywhere at any time in today’s business world. Cloud-based policy administration software provides mobile-friendly web access, so people can log in from home, remote offices, or even while traveling. This facilitates flexible modern, remote, and hybrid work arrangements that offer more agility in today’s global economy. It also improves productivity by providing insurance agents instant access to policy information from client sites via tablets and smartphones. Meeting these new workspace mobility requirements is difficult and expensive with on-premises solutions.

Significant Cost Savings While Optimizing Resources

While the advantages mentioned so far focus primarily on capabilities, moving to the cloud also provides significant direct cost savings compared to on-premises systems. When you host software and hardware yourself, you must purchase capacity to meet peak demand even though it sits idle some of the time. With cloud usage-based pricing, you only pay for what you utilize. Cloud platforms also don’t require big capital outlays for hardware and data centers. Eliminating these expenses saves money on an ongoing basis while also optimizing resource utilization. This allows insurance companies to reduce IT infrastructure costs significantly.

Innovation Leverage to Drive Growth

By gaining instant access to new innovations, cloud-based policy administration systems keep you competitive. For example, leveraging artificial intelligence, machine learning, and advanced analytics can provide insights that weren’t available in legacy policy admin systems. Switching to the cloud allows you to leverage these innovations through your core system instead of investing in custom software projects. This keeps your capabilities fresh and prevents you from falling behind insurtech industry trends. Having systems innately infused with leading-edge capabilities drives growth.

Simplified Integrations Between Solutions

Most insurance providers use a mix of solutions spanning core policy administration as well as supplemental agency management, data analytics, CRM, distribution management, and other systems. Cloud-based solutions integrate much easier than on-premises software. They provide modern API-based integration methods along with pre-built connectors. This simplifies tying together your ecosystem of solutions to create seamless end-to-end processes. Integrations that once took months are now reduced to weeks in many cases. This agility speeds up the delivery of new initiatives to the market.

Predictable Operating Expenses and Cash Flow

With cloud-based policy administration software, costs shift from lumpier capital expenditures to smoother operating expenses. This makes budgets more predictable. Instead of periodic big investments in upgrades, you pay a monthly subscription fee based on your usage. Moving to the cloud also qualifies costs as a variable operating expense rather than a fixed capital expense, which many insurers prefer from an accounting perspective. Steadier cash flow improves financial planning abilities.

Focus Strategic Internal Teams on Innovation

Freeing your IT staff from maintaining on-premises hardware and software enables them to focus on more strategic initiatives. This higher-value focus on innovation helps insurance companies differentiate themselves instead of wasting resources on infrastructure that isn’t core to market differentiation. The cloud policy administration provider handles the technical details, so internal teams can drive transformation and growth strategies.

Rapid Implementation Accelerates Value Realization

Implementing and upgrading traditional on-premises policy administration systems typically takes significant time and resources spread over lengthy multi-year timelines. The faster speed of software innovation available through cloud-based policy admin systems keeps you competitive and prevents you from remaining stuck with old technology that limits your capabilities. Quick implementation timelines also allow you to innovate faster.

The Future of Insurance Technology

The advantages summarized above illustrate why most industry experts state that cloud-based systems are the future for policy administration systems in the insurance industry. Leading analysts project that virtually all insurance providers will switch their core systems to the cloud in coming years to achieve these benefits as legacy systems reach end-of-life status.. If you’re ready to learn more about the advantages of cloud-based policy administration systems, reach out to us today.

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