(Editor's note: Occasionally, we ask an insurance technologyleader a single question to elicit a response that will enlightenand inform the technology channel readership. If you would like toparticipate, contact the editor at [email protected])

Vivek Gujral is executive vice president and CTO atOneShield.

Question: Why should an insurer considerprivate cloud services?

The advantages of cloud-based services are rapidly becoming moreappealing for insurers, and now is definitely the time to considerall the options. The cloud provides insurers the flexibility torespond quickly to changing market needs and customer demandswithout additional investments in capital or technologyinfrastructure. In short, it enables insurers to react and scalequickly and efficiently.

It also serves as a powerful differentiator in the marketplace.While the mention of "cloud" still elicits concerns about privacyand security risks from some, in reality, a private cloud modelenables insurers to take full advantage of cloud capabilities whilemaintaining the highest levels of privacy and control.

With a private cloud approach, insurers access a proprietaryenvironment where infrastructure is hosted and maintained by anoutside technology provider. This approach still allows for maximumintegration and configuration capabilities, while enabling lowercost services to agents, brokers and customers.  Economiesare gained principally by sharing the human resource cost ofinfrastructure maintenance, as well as the bulk purchasing andutilization smoothing power of the cloud provider.

The depth of a private cloud solution is truly visible at theinfrastructure level (Infrastructure as a Service – IaaS), althoughthere are interesting variants available at the software level(Software as a Service – SaaS), and most recently, at the platformlevel (Platform as a Service – PaaS).

Insurers stand to gain significantly when they implement privatecloud services, even at the relatively plain vanilla level of IaaS.Benefits include:  

• Lower technology total cost of ownership (TCO) based on ashared infrastructure model between the insurer and the cloudprovider;
• Flexible pricing model to best meet the insurer's needs, sincemany cloud providers offer the opportunity for insurers to pay onlyfor what they use, and therefore making it easier to determinefuture growth costs;
• Complete oversight and administration of the environment at athird-party data center;
•  Improved redundancy and scalability.

Overall, private cloud services ease the burden ofinfrastructure demands while maintaining the highest levels ofprivacy and security. Working with an experienced, applicationsavvy, technology provider is also important, as insurers have theadded value of seasoned technical experts to fully support thesoftware development lifecycle and the specific system integrationsto optimize the deployment of applications.  Private cloudservices are a win-win for insurers regardless of company size,lines of business written, distribution models, or even geographicregions served.