While managing risk is a key component of the insurance business, unfortunately, many smaller insurance companies may not be giving sufficient weight to the risks of obsolete or inefficient technology. Using outdated legacy software can not only be burdensome to the company’s bottom line, it can allow competitors to gain a significant advantage in application processing, underwriting, and many other business functions. It is for this reason that many small to medium-sized insurance companies are turning to cloud-based software with an ever-increasing frequency.
Cloud-based systems are obtained through an agreement with a company that serves as the provider of the platform that provides the software and associated services remotely from the provider’s server. These providers maintain the software to make sure that it is always up-to-date both in function and with laws and regulations governing the insurance industry.
Insurance companies using cloud-based technology no longer have to keep technology personnel on the payroll, and no longer have to worry about obsolescence or the expense of maintaining costly hardware, software, and associated supplies. The cloud-based system functions as a form of software insurance in which the burden of maintenance lies with the provider. The cost of using this type of technology is handled in a similar manner as a subscription in which a fee is paid on an agreed-upon schedule such as monthly, quarterly, or annually.
Another problem with legacy software is its limitations. These types of software all too often operate with functions that work independently of each other, causing missed opportunities for cross-selling and up-selling. For example, many such systems may have a database for customers with automobile insurance, and another database for customers with a homeowner’s policy and the two databases have no way of cross-referencing each other.
Most cloud-based software applications are written in such a way as to make lost opportunities such as these a thing of the past. These systems are designed to let sales staff and other appropriate personnel know when an opportunity arises for cross-selling or helping customers upgrade their coverage’s. This is another manner in which these systems act as software insurance. They help to ensure that missed opportunities do not happen.
Perhaps the most critical advantage to cloud-based insurance software lies in the fact that these systems allow smaller insurance companies to compete with their larger counterparts more effectively and efficiently. Again, by functioning as software insurance, these systems save time and money by removing the burden of managing an information technology department, by virtually eliminating downtime due to software malfunctions, and by allowing company management to focus less on technology worries and more on growing their businesses.