Cloud Case for the Insurance Industry
The Insurance Industry, a risk-averse culture that has been slow to adapt to the cloud, is finding that there are some avenues where moving to the cloud is making a lot of sense. When it comes to SaaS (Software as a Service) and PaaS (Platform as a Service) the insurance industry can see some real opportunities for new efficiencies that have many of the traditional carriers looking at moving some elements of their business to the cloud.
Security, however, remains a major concern for many in the industry, and with good reason. “Recent headlines about major data breaches have by no means allayed insurers’ anxieties around client data confidentiality,” comments Aite Group Director of Research, Clark Troy. He does, however, point out that there are some applications, including new business, underwriting and claims solutions, along with some industry-specific needs such as monthly analytical scoring that are particularly well suited for the cloud. With the monthly analytical scoring, most systems are running only 12 days out of the year, making this the perfect application for the cloud as there is then no need to pay for the other 353 days of the year when the infrastructure will sit idle.
“The beauty of it is that it is vapor – you push a button and it’s there and the second you have completed your activity, you tear it down,” says Steve Byrne, VP of Agency and Field Automation Technology and acting CTO of Harleysville Insurance. Byrne stresses that the cloud has been particularly useful for software development and testing.
“To buy the hardware for test environments is extremely expensive and they will sit idle most of the time anyway, ” comments Byrne. The cloud allows a company to “quickly provision the needed resources, including platform, database and operating systems, and applications, required to support and develop testing activities.”
Another advantage of the cloud is when an insurance company is looking at the possibilities of new business ventures. This kind of exploration often requires having IT acquire and build out infrastructure to support the new venture, and if it does not succeed you are left with unwanted infrastructure. A good example of this is Harleysville Insurance’s current opportunity to explore the development of disaster recovery. The model for this type of use allows them to create and put on hold the required structure, until it is needed in a disaster. The end result: they only pay for it when they need it.
Although Byrne readily admits that he would be uncomfortable moving core data into the cloud at this point in time, the possibilities that it opens up for other types of ventures makes it a good fit for his industry in that regard.
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