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Cloud computing in Insurance

With the ever increasing number of Insurance companies and the profit margins getting reduced it has become a necessity to increase the speed to enter the market with newer products and lowering the operating cost so that profit margins are increased. To achieve this cloud computing can be the technology to bank upon in the future.

Tech Target Inc. defines Cloud Computing “Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS).”

In this article we try to understand the significance growth prospects of cloud computing, concept of cloud computing, working of this technology, Types of cloud computing services, cloud computing in insurance, benefits and the challenges.

Cloud computing

Cloud computing in Insurance With the ever increasing number of Insurance companies and the profit marginshttp://www.csc.com/cio_barometer/aut/102717-cloud_computing ) As we can see among Insurance company Company CIO’s 72 % identified % identified cloud computing as major development initiative to be carried out by the company . This show the importance of cloud computing Working of Cloud Computing " id="pdf-obj-0-16" src="pdf-obj-0-16.jpg">

Figure 1-Percent of CIO’s who identified cloud computing as a major development initiative in 2013 (Source: http://www.csc.com/cio_barometer/aut/102717-cloud_computing)

As we can see among Insurance companyCompany CIO’s

72% identified%

identified cloud computing as major development initiative to be carried out

by the company. This show the importance of cloud computing

Working of Cloud Computing

Figure 2-Cloud computing model (Source: http://www.opengroup.org/cloud/cloud/cloud_for_business/what.htm) The concept of cloud computing can be explained with the

Figure 2-Cloud computing model (Source: http://www.opengroup.org/cloud/cloud/cloud_for_business/what.htm)

The concept of cloud computing can be explained with the help of Virtual Desktop interface (VDI) which we use at Wipro. Instead of installing/maintaining software on each desktop/Laptop which will be a tedious process we have a VDI login to each user configured with the required software. So if any new software

installation/removal has to be done ,done, using the user credential it can be done seamlessly in the server directly. There is a remarkable work load shift as the local systems need not have to run heavy applications and also the dependency on the office systems will be reduced as cloud applications can be accessed outside the office premises.

Each employee has a User Id and password .Employee can enter his credentials and can access different applications like Microsoft Office Suite, Outlook, Lync Messenger ,SAPMessenger, SAP front end, internet and other applications without any hassles.

Types of Cloud Computing Service

Cloud computing classification

  • 1. Location

Private-It is owned by a customer/organization and security and

controls are of highest standard Public-They use shared resources and are cost effective but are

vulnerable to security attacks Hybrid –A mix of public and private based on the data/information Community-It is shared between organizations .For Ex-State

government can have a community cloud which can be accessed by

different departments.

  • 2. Service

SaaS- Software can be accessed based on pay per use basis and this is

the most popular service used which has 81% market share of overall cloud computing market.

PaaS-Here a development environment is provided which includes Operating system, Database, webserver IaaS-They offer storage discs and virtual servers

 PaaS-Here a development environment is provided which includes Operating system, Database, webserver  IaaS-They offer

The above diagrams can be removed as they don’t convey any new information that’s not already been discussed .

Figure 3-Private vs Public Cloud

(Image Source: TalkCloudComputing)

 PaaS-Here a development environment is provided which includes Operating system, Database, webserver  IaaS-They offer

Figure 34-Cloud Services Types and Examples (Image Source: TheGadgetSquare)

Cloud computing in Insurance

Currently in Insurance lot of insurance companies are venturing into cloud and converting a Business Process Outsourcing (BPO) model to Insourcing model using

SaaS. A company called Cyprus providing home Owners and Liability insurance in Florida and Texas has not only switched to cloud for its policy administration system but also integrated industry standard applications like ISO 360 to the cloud application.

Another insurance company called UPC (United property and casualty Co) which is providing Homeowners, dwelling and Fire insurance not only moved from BPO and internal systems to Cloud but also moving more policy management information to cloud which can be used for analytics and reporting.

Even in non core applications like eLearning for Insurance Employees, cloud is playing a major role. Combined Insurance Company is using a SaaS delivered platform called Brainshark for creating learning programs which is more convenient than the available traditional e learning .This can be viewed in mobile platform also.

Even in claim management cloud is growing rapidly. Albuquerque N.M. municipality has used a cloud application called Claim Vision from PCIS which has made entering information easier .It is is also better integrated with applications like People Soft which in turn which help process claims quickly and efficiently.

Sun corp has efficiently used Amazon web services (AWS) to support Agile principles and practices. They have launched a virtual private cloud and data center and are moving 2000 applications to cloud.

  • 1. Factors for cloud computing growth in insurance Cost-Investment in cloud infrastructure has increased tremendously in the last few years which has resulted in economies of scale and the cost of these services have reduced drastically. Security-There is a growing trust on these services as the security concerns are getting addressed and people are slowly accepting it with the introduction of private cloud. Competition-Time is money for an insurance company in this competitive market. Timing of the market can make a product successful. Bringing quality product at a lesser time can be achieved using cloud computing. Entry Barriers-Entering a new market requires lot of investment as there are variations in product offering, using these cloud products available in the market , Insurance companies can tap the real potential without waiting for long Data Storage-Cloud computing also brings in seemingly ‘unlimited’ data storage capacity which in-turn reduces internal IT cost hugely. Product Deployment-Easier deployment process Backup & Recovery-Reliable backup and easier recovery options

Companies like Accenture have already experimented implementing SaaS (Software as a Service) for First notification of loss (FNOL) which is one of the most important steps in Claim Management.

Even NTT Data with its application called First Gen for P&C is trying to implement entire policy lifecycle in cloud. Guide wire has launched cloud based apps for P&C.

Wipro, TCS, Infosys and other IT companies are implementing cloud based solutions to its clients.

Wipro has developed its own IaaS called Wipro iStructure Services. It offers Storage, Recovery, Compute capabilities, network, security and other services.

These services are offered as consumption based services to Enterprises. It will act as a foundation for offering broad set of infrastructure, Application and BPO solutions. Wipro has also partnered with Google to customize the

Google Cloud offerings to it clients.

As stated by T.K.Kurien ,CEOT.K.Kurien, CEO Wipro there areare even plans to create a new subsidiary or Business Unit for Cloud Services

3. Benefits

  • a. Standardization

As there are different geographies with multiple products, having standardization will improve the overall process

  • b. Scalability

One of the highlights of cloud computing is its feature of scalability. Cloud services will allow us to upscale or downscale our IT resource.

Whenever we have a peak IT demand then these cloud services will help us to increase our existing resources to meet our business needs /demands

without affecting the cost.

c.

Analytics

As we know analytics can be a key factor in improving customer satisfaction and also offering better products to the customer. Though companies have a huge amount of structured and unstructured data still they are not able to use it to full potential due to non availability of analytics or not having appropriate tools. Even sharing integration of the data is a daunting task. To

overcome these problems cloud computing can act as aan important tool.

Cloud computing can store huge amount of data both real time and historic data and help in analyzing and generating useful reports in a cost effective way.

4. Challenges

  • a. Incompatibility

There are legacy systems used which may not be technically feasible to be integrated with cloud solution to use the technology to its full potential

  • b. Data Security

There are questions about the customer’s personal data getting leaked in internet which can eventually destroy insurer reputation

  • c. Compliance

There are regulatory compliance issues which can discourage the insurers in adopting cloud solutions for their core processes.

Conclusion

To start with, all the non-core processes can be moved to cloud then slowly core processes can be moved to cloud. Holistic cloud strategy which is a amalgamation of risk consideration, level of standardization ,identification of function and application that can be moved to cloud should be adopted by the insurance company which will eventually benefit the company and overcome the challenges systematically .By adopting cloud solutions which can cater to multiple platform can help in overcoming incompatibility issue.

Private cloud can be used to take care of data security. Based on the sensitivity of data private cloud or Hybrid cloud can be used. Once the data

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