Originally posted on Insurance Business UK here
Listen to any of insurance’s major players in recent years and you’ll have heard the same messages about digital, big data and a general technological push. Recently Marc Wilson, CEO of Aviva, even went as far as to describe insurance brokers as being in the “Stone Age” when it comes to digital.
Yet the reality for many regional brokers is that they have enough bills to pay without splashing the cash on expensive new software that may even cause temporary disruption to the way they do business.
However, what if that technology could actually save you money? Insurance Business UK caught up with Henry Duncombe, managing director of Lanware, a technology provider which has been specialising in financial services for 10 years and whose client base is 30% insurers, to find out about how brokers can use cloud technology to actually make savings.
“Cloud is relevant for everyone,” he said. “The key business cases and the benefits are there for all – quicker and more affordable access to flexible and scalable technology with less commitment. For smaller businesses it makes sense for them to be looking at the cloud for CRM systems. They can gain access to quite sophisticated technology at a lower cost without running it themselves. They can also use it to develop new products, services and applications and reduce their time to market.”
Technology, of course, is already with us. Whether you’re sophisticated enough to be delving into the “internet of things” or whether you’re still manually calculating invoices on a spreadsheet, technology is a crucial part of your business and, more than likely, an expensive part too. It’s this expense, or lack thereof, that Duncombe believes is a crucial selling point for cloud technology.
“Brokers probably have an amount of technology that they rely on and this constantly needs to be updated,” continued Duncombe. “They are in a ‘forever cycle’ where they constantly need to replace it. Indeed they may have built up a certain level of internal expertise with assets and complexity around it. However, the cloud can help release them from that – whether that’s their core business or a part of it.
“It’s an opportunity for people who are relying on the ‘buy, upgrade and bin’ lifecycle of technology to reduce their requirements in terms of internal expertise and the hassle that goes around that. The figures suggest it can be up to four times more expensive to operate these things internally than it is through the cloud.
“It’s also about controlling that cost. A lot of businesses don’t really know what IT costs them. Putting a number on it is really useful because it’s hard to understand what existing costs are around IT and moving to a service, usage based model puts a number on it and controls it a lot more effectively making it easier to budget.”
It’s an advantage that Duncombe believes is particularly pertinent for the insurance industry.
“Insurers and brokers are more conservative as an industry and they do tend to be slower with their take-up,” he said. “However, there are real advantages with this sort of technology because they have less need to tailor it but still get the upscale and cost benefits. So, for example, with a virtual desktop, we’re seeing that insurance clients are much more likely to benefit than say, for example, a hedge fund manager who wants to do lots of weird and wonderful things.”
Duncombe states that cloud technology is increasingly in demand and that a time will come where, if brokers don’t offer such a user-based experience, clients will look elsewhere.
“One of the interesting trends is the fact that, whether you like it or not, users are dictating that the cloud is going to be where they source their technology from and it’s very difficult to control that,” he said. “With more and more technology available on the internet, which can be sourced quite easily with minimal set up, we’re seeing users bypass the IT department to source what they need.
“More and more independent software providers are redeveloping their products to be delivered from the cloud. We’ve got new start-ups and new bits of technology out there that are actually being born in the cloud and you’ve got the digital generation coming into the workplace who could care less about whether something is sourced internally or not.
“The fact is that any user driven opportunity is a good one and you need to be geared up for this.”