How the insurance industry is set to fully embrace cloud
The consumer insurance industry may be one of the more reluctant industries to jump head-first into the cloud. Think about the current process of getting a home, renters, auto or life insurance policy through a traditional vendor. You might shop for quotes online, visit an agent in person, or have companies compete over your business.
Think about all the back-end computing that goes into running an insurance operation. Agents are always in the field assessing damages, administrative personnel is fielding customer inquiries while claims can be placed 24 hours a day.
Traditional IT systems become inefficient when expanded to this scale which is why the cloud model is starting to make more sense for insurance agencies that are looking to reduce costs and increase IT efficiency.
Tony Jacob, Managing Director of Worldwide Insurance at Microsoft says, “The reality today is that many insurers are held back by their legacy IT infrastructures.” He continues by saying, “Much of their IT budgets go towards maintaining their core systems, and these budgets are being reduced. They have limited resources left over to innovate in areas such as distribution channels or new product development.”
Some insurance companies have become early adopters of cloud. The typical cloud integration involves SaaS as a small, subtle entry point for organisations. Once insurance agencies begin to feel more comfortable about putting their non-critical systems in the cloud, the insurance industry will start to embrace the cloud as a whole by moving mission critical functions into public, private and hybrid clouds.
The insurance industry may be forced to do this due to rising costs of maintaining on premises hardware and overhead. With regulatory concerns such as audits and internal risk assessments, cloud may not be optional in the insurance industry.
“The nature of risk and the regulatory environments are changing too, yet insurers often do not have the internal compute capacity to react to these factors,” says Tony Jacob.