A study on Software-as-a-Service for Small and Medium Insurers

A study on Software-as-a-Service for Small and Medium Insurers

The global economy crisis has affected the survivability of many life/non-life insurance companies, especially small and medium insurers. In these economic conditions, large insurers have more wiggle-room in terms of their IT budgets, which would enable them to aim for a bigger share in the market. Small and Medium Insurers (SMI) do not have this luxury and hence have to rethink their business and IT strategy. Though IT expense reduction is an important aspect, a holistic approach needs to be followed, as IT is the key driver for any business growth. There has been an impact on the investment on major strategic projects but future business growth driver will require investment in new technologies. This contradicting situation has made many SMIs to adapt out-of-box solutions. One such solution, Software-as-a-Service (SaaS), looks promising. The compelling benefits of SaaS such as reduced total cost of ownership and access to new and emerging technologies can help SMIs focus on providing business value to their customers and not fear of coping up with technology advances of larger insurers. Largely, insurers are slow in adapting SaaS due to several reasons: data security, software availability, stability of provider and conventional mindset.

This white paper intends to provide guidance for SMIs who think of taking the SaaS road for core application portfolios like Policy Underwriting and Administration, Claims and Billing. This paper also discusses the role of independent software vendors (ISV) in providing SaaS offerings for core insurance applications.

Introduction

Decrease in profit, new business and return on investments have virtually crippled the insurance companies and may take years for them to recover. Though there is a global impact for all types of carriers, the impact on SMIs is enormous. One important strategy, which is emerging from this economic crisis, regardless of industry, is the focus on having a flexible IT cost structure. As the economy recovers, the focus will shift towards winning new businesses keeping overall IT cost structure still low. This is the driving factor for companies continuing their IT investment in SaaS1. A Forrester’s survey comparison for Q4 2008 shows more SaaS usage than a similar study conducted a year earlier - enterprises piloting or using SaaS has increased from 18% to 21% . In addition, the adoption of SaaS to different types of applications has evolved from CRM type applications to financial and mission-critical applications. This white paper will give a brief overview on the SMI technology trends, challenges faced by SMIs, how SaaS can help overcome these challenges and the different options available in the SaaS space to SMIs along with important considerations for vendor selection. Since independent software vendors mostly managed insurance software realm until now, the role of Independent Software Vendors (ISV) such as Tata Consultancy Services Limited (TCS) in the SaaS world is also touched upon in this paper. TCS’ offering in insurance solution space is also discussed in this paper.

Download

Download full seminar papers At
http://www.enjineer.com/forum