Insurer adoption of cloud hosted 'Software as a Service' (SaaS) technology is set to grow as a response to unprecedented regulatory change, according to new research from insurance technology specialist, SSP. 82% of insurers are considering deploying SaaS technology within their business in some form, with 55% citing its ability to enable them to respond to regulatory changes as the overall the most recognised benefit.
The research, which surveyed 94 senior insurance decision makers and insurance IT professionals, also found that insurers see SaaS as a way of making their businesses more nimble. Just under half of insurers see cost reductions (48%) and increased product speed to market (47%) among the benefits of SaaS technology. This is possible because SaaS technology moves insurers away from costly 'on premise' installations to a more rapidly deployable, externally hosted and managed model.
There are strong indications that SaaS is becoming more mainstream solution across the industry. Amongst insurers considering implementing SaaS, more than half (59%) said they would across their whole business, compared to 34% who would consider deploying the technology across selected niche or orphan business lines.
However, some insurers remain concerned about a perceived loss of control in moving their software to a SaaS model with a quarter (27%) of respondents saying this is a barrier to adoption. SSP believes that the flexibility provided by SaaS solutions will swing opinion in the long term and expects 80% of its insurance policy administration clients to move to a SaaS model by 2020.
Stephen Lathrope, Chief Customer Officer at SSP said:
"Insurers tell us again and again that they need their IT systems to be able to respond more quickly to changing demands on their businesses and enable them to take advantage of emerging market opportunities. Compared to traditional "on premise" systems which typically involve expensive and time consuming development and installation, SaaS-based solutions provide new and enhanced capabilities more rapidly and at lower cost. By having these capabilities delivered to them via specialist providers, insurers can focus their time and money more on innovation within their business, and less on keeping their technology up to date.
"This approach is particularly useful when dealing with the level of change that we see resulting for the current regulatory climate. Insurers have been grappling with Flood Re, changes in the Insurance Premium Tax and the Competition and Markets Authority's reforms to motor insurance to name just a few. Having these changes handled for them by their service provider reduces the level of distraction within their own teams, enabling them to focus on competing in the marketplace".
