Cloud-Native Insurance Software Solutions to Maximize Growth and Streamline Operations

This post is part of a series sponsored by AgentSync.

Having your head “in the clouds” might not be desirable, but storing your data “in the cloud” certainly has its benefits. As more people and companies move to cloud storage for their personal and professional data, the gold standard is cloud-native software that’s built with flexibility and security in mind. Read on to learn the basics of cloud-native software and its growing popularity within the insurance industry.

What is cloud-native software?

iCloud, Google Cloud, Dropbox, just to name a few: We’re all familiar with cloud storage in our daily lives, if for no other reason than it’s where our photos and music live so we can access them from our phones, tablets, and computers without carrying around a hard drive.

But what does it mean for a software to actually be “cloud-native?” Just like it sounds, cloud-native refers to a software application that was built specifically to function in a cloud (distributed and web-based) environment, rather than living on a physical drive or server.

As opposed to older applications that evolved to incorporate cloud components, cloud-native software originates in its cloud-based form. For example, you can’t download a version of “QuickBooks Online” to your computer no matter how much you want to, because it only exists in the cloud. Often, tech products that are sold as Software-as-a-Service (SaaS) – and require an ongoing subscription rather than a one-time purchase – are cloud-native. AgentSync is no exception.

One of cloud-native software’s defining factors is its ability to be deployed quickly, and receive ongoing updates and improvements that can be released in real-time, without requiring down-time or negatively impacting the software’s other functions.

Key features of cloud-native software include:

Microservices architecture: You can think of cloud-native software as a collection of “microservices” or “microapplications.” Google Cloud defines this as “individual, loosely coupled components” meaning that instead of one large program, the way we used to think of a piece of software, cloud-native software is built by a number of individually functioning parts that form the whole.

Containerization: Because of this microservices architecture, cloud-native software can benefit from its developers’ ability to work on small pieces at a time, upgrading or fixing specific functions, without impacting the software as a whole. This is known as containerization.

Continuous integration: Due to how it’s built, cloud-native software can accommodate ongoing improvements, bug fixes, and new integrations that aren’t possible with legacy technologies. It’s the difference between having to take your car into the shop for a new tire and being able to patch a quick hole while on the run. The latter, like cloud-native infrastructure, causes less disruption and very little downtime compared to needing to shut down an entire system to perform upgrades or fixes.

API-first approach: Since cloud-native software is inherently built on a foundation of microservices that integrate, using APIs to connect one software to another is a given.

Security and compliance: The largest cloud computing providers, who bring along top-of-the-line data security and compliance practices, power most cloud-native software. Big names like Amazon Web Services (AWS), Google Cloud, and Microsoft Azure offer their business customers assurance that the data they host for different cloud-native applications is safe and secure. For many insurance businesses, the peace of mind that a company as robust as Amazon is handling their data security is more comforting than the idea of being responsible for it in-house.

The rise of cloud-native applications in insurance

As more and more software moves to cloud-based infrastructure, so does the technology that powers the insurance industry. Even though cloud-native insurance software has been readily available since the early 2000s, insurance businesses haven’t all been quick to retire their legacy systems and adopt cloud-native infrastructure.

This seems to be changing, and changing more rapidly, as we approach the first quarter-century mark. According to a 2022 report by McKinsey & Company, insurers project a 32 percent annual growth in their use of cloud services by 2025. With a lot of room for growth in its overall use of cloud services, the insurance industry is also near the top of the list of industries that can reap the highest economic rewards.

Examples of cloud-native software in insurance

Nearly every, if not every, type of product or service an insurance business uses daily can be found as a cloud-native application. That doesn’t mean most insurance carriers, agencies, or MGAs have adopted cloud-native versions of their day-to-day software, but the choice to do so exists over a large portion of the integral insurance functions.

Some of the most common examples of cloud-native software in insurance include:

Agency management systems
Claims management systems
Policy administration systems
Comparative rating software
Customer relationship management systems
Email marketing platforms
Insurance compliance management systems

Benefits of cloud-native software for insurance professionals and businesses

One of the most significant benefits of cloud-native insurance technology is its ability to integrate with other applications via APIs, thus enabling companies to automate once-manual tasks and processes.

Other benefits that insurance businesses and the professionals working at them enjoy include:

Scalability: Cloud-native software can support one, 100, or 1 million users (assuming it’s built on solid infrastructure). This allows companies that invest in cloud-native technology products to expand and contract quickly, without interruption to their daily operations. There’s no waiting on purchasing a new software license or installing the product. It’s usually as simple as the admin user inviting someone to join an existing platform.

Or, on the other hand, deactivating a user instantaneously, when needed. This is particularly applicable in the insurance industry, where companies have seasonal fluctuations and need to quickly onboard new producers or adjusters to meet their demands.

Flexibility: One of the biggest advantages of cloud-native software for insurance professionals and their employers is the flexibility it gives people to work from anywhere. An insurance agent or claims adjuster can theoretically log into the system they use to perform their work from anywhere with internet access. The same can’t be said for legacy systems that require a user to be connected to a hard-wired network or pull data from an on-premises server.

Enhanced customer experience: This benefit bleeds over into one for insurance consumers too, but it most definitely benefits insurance businesses and professionals when they can provide a better customer experience. Just one way cloud-native software can do this is by being more reliable for people whose job it is to interface with customers. An insurance customer service representative or licensed agent won’t lose access to a customer’s policy information because of a local power outage or server crash.

Cloud-native software is built with redundancy in mind, and with resources spread out over many points to allow for a degree of operational malfunction without causing a major snafu. Try that with a legacy system that relies entirely on the power and internet working in one specific building at all times.

Reduced costs and resource use: What sounds like a better use of an insurance organization’s money: paying for multiple staff members to maintain legacy technology and on-prem servers, or paying the same number of employees to sell policies and service customers? The answer should be obvious. Moving to cloud-native insurtech can free up staff’s time and the company’s money to invest in things that’ll really move the needle on revenue and customer satisfaction – not just help maintain the status quo.

Innovation and competitive advantage: With most new tech innovations happening in the world of cloud-native software, insurance organizations that are equipped to embrace cloud technology will be best positioned to take advantage of new developments. Innovation can snowball as a company that’s already implemented a primary cloud-based technology can more easily adopt others as they become available (not to mention, they can integrate the new ones into the existing ones for even greater efficiency gains). Beyond the ability to leverage new technology as it comes out, these businesses will also gain a competitive advantage in the battle for younger insurance talent by providing a tech-forward employee experience.

Benefits of cloud-native software for insurance consumers

Insurance businesses aren’t the only ones benefiting from cloud-native technology. Consumers (and that’s literally every one of us!) get to reap the benefits, too. From better customer service, quicker claims processing, and the ability to get instant insurance quotes from multiple insurers, we all see the advantages of modern cloud-based software in our everyday insurance interactions.

Challenges of cloud-native insurance technology

No innovation is without its challenges and potential downsides. For cloud-native software, many of these aren’t inherent flaws in the technology itself. Rather, the challenges come largely from organizational and cultural preferences that permeate such a longstanding industry.

Legacy system replacement or integration: It can be no small challenge for an organization to revamp the way it does things. Moving from legacy technology to cloud-native insurance infrastructure can be time-consuming, costly, and include a lot of headaches. And, if an organization doesn’t move all of its systems to cloud-native software, it’s left with the challenge of integrating the new ones into the old (which weren’t built with seamless integration in mind).

Adoption and buy-in: People don’t always love change, even when the result promises to be a huge improvement. It can be hard on an organization, especially one in the insurance industry that’s been around for over a hundred years, to make a giant technological leap forward. If leadership’s buy-in isn’t the challenge, it can still be a hurdle to get users to adopt a new way of doing things.

Skill gaps and training needs: For the best adoption rates, and the best return on investment, it’s vital that insurance businesses moving towards cloud-native software provide the support their users will need to reap the benefits of the new technology.

Initial costs: Even though cloud-native software can be extremely cost-saving in the long run, there’s always a price to purchase and implement it. Smart insurance businesses will weigh the long-term costs and benefits and usually see that the initial cost will be recouped many times over. But for some companies, the price of moving towards a fully cloud-based tech stack just seems too high to overcome.

Security and compliance: You thought this was a benefit, right? It is, but it can also be a challenge. Not all cloud-native technologies are created equal. Some prioritize security and compliance and some…not so much. Luckily, there’re industry standards that quickly tell you if a software company is going to take security concerns off your plate, or add to them. Read more about the SOC II and why it’s important.

Despite these challenges, the future is absolutely going to be more cloud-native than not. Organizations that make the move towards a cloud-native tech stack will start getting the benefits sooner and be more prepared to innovate when the opportunity arises.

Go cloud-native with your insurance compliance

If you’re thinking that these benefits, like scalability, flexibility, security, and user experience would be great additions to your license compliance management processes, we’ve got great news! AgentSync is a cloud-native solution that makes managing the entire compliance lifecycle for producers, agents, broker-dealers, and adjusters quick and easy.

Contact us today to learn how AgentSync can help your organization, or read about how we’ve already helped insurance carriers, agencies, and MGAs transform their compliance practices.