Cloud takes a starring role in the new insurance core systems paradigm
The insurance industry is poised to utilize cloud in a whole new way.
Eight years ago, I was giving a talk on cloud at a conference. The first thing I had to do was explain what the cloud is.
It’s a new world, isn’t it/? Cloud is no longer for the digital giants, the InsurTechs and the early adopters. Today, it would be difficult to go through a whole day without using cloud computing.
Cloud-hosted core systems now common
Insurers’ core systems (policy, billing, and claims) are no exception. Cloud-hosted core systems are no longer a niche item: 59% of the new P&C core systems that insurers purchased in 2017 will be deployed in the cloud. On-premise deployment is by no means obsolete, but more and more, it will be only a fraction of insurers’ technical environments.
Increased speed to market, fast implementations, seamless scalability, easy access to new technologies, robust safety standards, and, in some cases, streamlined software upgrades have all attracted insurers to core in the cloud. What comes next, however, is where the real opportunity lies.
Related: InsurTech & the latest trends in core systems purchasing
The digital world is all about making connections — between people, technologies, services, data and data sources, etc. — and doing so at top speed. Whether your core systems are in the cloud, hosted by a solution provider, or run from your own server room, you have to be able to call out to external services for data and transactions.
New computing trends
New computing trends are pushing the abilities of core systems even further. Cutting-edge artificial intelligence (AI) services (think “rent-an-AI”) are only available through the cloud. For example, if you wanted to incorporate advanced natural language processing into your core systems, you would not simply install IBM Watson on your existing servers. Microservices, which are isolated processes that can be plugged into an existing technical architecture, fulfill their true potential by calling out to advanced, external services like blockchain and IoT data platforms.
Related: P&C insurers put Saas at the center of digital transformation
Then there are the possibilities offered by computing in the cloud. Serverless computing allows insurers to leave all server management and resource provisioning to the cloud provider for increased processing power, decreased latency, and real-sized costs — it represents an evolution in the way that we consume and use cloud. For insurers looking at huge new sources of data, like wearable devices, serverless computing is a must.
These are the real benefits of cloud computing. Core systems in the cloud can take advantage of some of these new computing trends more easily, but all have an opportunity to leverage the cloud to advance their technological capabilities.
Streamlining, connecting to advanced tech, consuming more data
The insurance industry is poised to utilize cloud in a whole new way by streamlining processes and upgrades, connecting to advanced technology and consuming more data. The more benefits insurers reap from cloud computing, the more cloud computing will become table stakes.
To learn more about the latest computing trends and how they will affect insurers’ core systems, please see our recent report, “The New World of Core Systems: How New Computing Trends Will Transform the Core Systems Paradigm.”
Karen Furtado is a partner at Boston-based StrategyMeetsAction (SMA), an insurance strategic advisory firm. She can be reached at kfurtado@strategymeetsaction.com. This article first appeared on StrategyMeetsAction.com and is reprinted here with permission. Opinions expressed in this article are the author’s own.