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Insurance as a service: Software as a Service set to transform the insurance industry – Half of insurers believe SaaS will transform the industry within five years
London, 10 June 2015: Studies conducted by Ovum, the global analyst house*, reveal that the use of SaaS (software as a service) in the global insurance industry is already significant with at least a third of all insurers fully deploying or trialling SaaS currently. Despite a significant minority of insurers remaining cautious of SaaS (for regulatory, risk and reliability reasons) there is almost universal agreement among insurance carriers that SaaS will have a significant impact on both the insurance industry and individual insurers within the next five years.
As SaaS investment is shown to increase strongly over the next 18 months, how should insurers and IT groups prepare? Charles Juniper, Principal Insurance Analyst at Ovum has laid out three key recommendations for insurers to keep in mind as they begin their SaaS transformations:
SaaS strategies must incorporate benefits beyond just cost reduction
Cost reduction is already seen as an obvious benefit of cloud and SaaS, but this is only one of many. Ovum believes 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 organisation in the context of wider industry change. 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.”
All insurers must 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. For the minority of insurers that do not have some level of SaaS strategy, it must become an urgent priority. They should not wait for the technology to mature further or for remaining issues to be completely resolved, as this delay will significantly reduce the benefits of adoption.”
IT groups should look to evolve towards 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. In reaction to this, the IT function of insurers needs to evolve towards assuming a “broker” role, bringing together an insurer’s wider business functions with relevant SaaS vendors – this change in role marks a distinct contrast to the more reactive stance of many IT groups currently.”
Ovum is a leading global technology research and advisory firm. Through its 180 analysts worldwide it offers expert analysis and strategic insight across the IT, telecoms, and media industries. Founded in 1985, Ovum has one of the most experienced analyst teams in the industry and is a respected source of guidance for technology business leaders, CIOs, vendors, service providers, and regulators looking for comprehensive, accurate, and insightful market data, research, and consulting. With 23 offices across six continents, Ovum offers a truly global perspective on technology and media markets and provides thousands of clients with insight including workflow tools, forecasts, surveys, market assessments, technology audits, and opinion. In 2012, Ovum was jointly named Global Analyst Firm of the Year by the IIAR.
Ovum is a division of Informa plc, one of the leading business and academic publishing and event organisers globally, headquartered in London. Informa is quoted on the London Stock Exchange.