The Complete Guide to Leveraging Insurance-as-a-Service in 2024
Hello, and welcome to this comprehensive guide on how to leverage Insurance-as-a-Service (IaaS) to transform your insurance operations in 2024!
IaaS is gaining significant traction among insurers as an innovative model to accelerate digital transformation. By collaborating with insurtech platforms, you can rapidly integrate new technologies and deliver superior customer experiences.
In this guide, I will provide essential insights to help you successfully adopt IaaS:
What is Insurance as a Service and How Does it Work?
Put simply, Insurance as a Service involves purchasing technology-driven insurance capabilities from specialized insurtech platforms, rather than developing them in-house.
These insurtechs make their solutions available on a subscription basis via the cloud. So instead of investing time and money building and maintaining complex systems, you can access ready-to-use digital insurance services on-demand.
Some key examples of IaaS solutions include:
- Underwriting engines – Automated risk pricing and policy issuance
- Claims management – Streamlined digital claims processing
- Customer engagement – Chatbots, portals for self-service
- Fraud analytics – AI for fraud prediction and prevention
- Agent portals – Digital tools for agents and brokers
By integrating these specialized IaaS modules into your environment, you can rapidly enhance legacy processes and address changing customer expectations.
Why Should You Consider IaaS for Your Insurance Business?
Let‘s look at some compelling reasons to leverage IaaS platforms:
- Faster innovation: IaaS allows you to quickly integrate cutting-edge insurtech innovations rather than playing catch-up in-house.
- Improved loss ratios: Digital underwriting and claims can optimize costs and accuracy in risk assessment and payouts.
- Enhanced customer experience: Self-service options and 24/7 accessibility empower customers.
- Greater agility: On-demand access to tools like fraud analytics provides strategic advantages.
- Usage-based pricing: Pay only for the capabilities used rather than large fixed investments.
According to a McKinsey survey, over 75% of insurers struggle with profitability. IaaS provides an avenue to transform legacy practices and boost competitiveness.
Evaluating IaaS Models for Your Needs
There are three primary IaaS models to choose from:
Full-stack digitization: End-to-end platforms to manage the entire insurance process including distribution, underwriting, billing and claims. Suitable for greenfield insurers.
Process digitization: Point solutions focused on automating specific workflows like underwriting or claims. Useful for established insurers looking to digitize certain processes.
Core systems IaaS: Cloud-based policy, claims or billing systems provided on-demand. Allows transition from legacy on-premise systems without large capital outlays.
Let‘s examine these models in more detail:
| Model | Description | Example Providers |
|---|---|---|
| Full-stack digitization | Fully integrated suite for product configuration, underwriting, billing and claims. | Planck, Trov, Element Insurance |
| Process digitization | Specialized tools to digitize underwriting, claims or other workflows. | Cape Analytics, Shift Technology, Tractable |
| Core systems IaaS | Cloud-based core insurance systems for policy admin, claims or billing. | Duck Creek, Guidewire, Sapiens |
Evaluate your needs to determine the right model – whether you need an end-to-end suite or targeted solutions for specific processes.
Choosing the Right IaaS Platform and Vendor
Here are some tips on selecting the best IaaS solution for your insurance business:
- Clearly identify priority processes and use cases for digitization. This drives platform evaluation.
- Shortlist vendors that specialize in your focus areas like underwriting automation, claims, billing etc.
- Assess technical fit. Review APIs for integration with your systems. Verify security protocols.
- Evaluate overall vendor reputation, clientele, market presence and support capabilities.
- Start with a limited pilot. Then scale up adoption across processes after demonstrating ROI.
Top IaaS platforms like Lemonade, Bold Penguin, Rivery and Insurmi have helped various insurers rapidly transform to digital models.
Overcoming Implementation Challenges
Adopting IaaS can enable tremendous progress. However, some key challenges you should anticipate:
- Legacy system integration – Assess technical debt and invest in APIs, microservices. Gradually replace legacy systems.
- Data security – Vet vendor security practices thoroughly. Encrypt data and control access.
- Vendor lock-in – Insist on data portability and standards-based technology.
- Compliance – Select vendors who understand regulatory needs and assist with compliance.
- Organizational change – Get executive buy-in. Involve staff in planning. Provide training on new systems.
With robust planning, you can overcome these hurdles for a successful implementation. Be sure to partner closely with your IaaS provider.
The Future is Bright for IaaS in Insurance
IaaS adoption in insurance is expected to grow exponentially, with spending projected to reach $15.4 billion by 2025 according to Accenture.
As insurers seek to unlock trapped value in legacy systems and keep pace with insurtech innovation, IaaS delivers an appealing model. Instead of significant in-house software investments, you can integrate on-demand digital capabilities and redirect budgets to innovation vs maintenance.
I hope this guide has provided you valuable insights on leveraging IaaS as you digitally transform insurance operations. Please reach out if you need any help identifying the right IaaS solutions for your specific needs and priorities. I will be happy to offer recommendations on picking the best platforms and vendors.
