The on-demand capabilities of cloud computing make it a compelling alternative for insurers looking to reduce costs around both applications and infrastructure. Yet concerns about security, stability, control, and other risks have caused the insurance industry to be relatively slow adopters of cloud technologies.

Three breakout sessions today will explore the benefits insurers can derive, examine how to mitigate risks, and attempt to separate hype from reality around cloud computing.

According to Bob Hirsch, one of the challenges of any discussion is agreeing on what the term “cloud” actually means.

“The issue is there’s a lot of marketing hype,” says Hirsch, director at Deloitte Consulting. “Just about every company that sells software has defined cloud to meet their marketing objectives.”

Hirsch’s session, “Cloud Computing for Insurers: Time to Get Your Head in the Clouds,” aims to clear up the confusion. It also plans to detail the benefits insurers can derive from the technology.

“Cloud is helping insurance companies achieve objectives around flexibility, speed, and cost,” Hirsch says. “One of the key reasons cloud is getting so much excitement in the insurance space is that it is an enabler of so many other technologies insurers are exploring, such as social networking and mobile computing. It’s all interrelated.”

Hirsch will illustrate the benefits of cloud with a case study from the insurance industry. That study will examine the strengths and weaknesses of cloud, with the objective of helping attendees determine how to utilize the technology successfully in their own organizations.

“There are challenges around privacy and security that can make IT very skeptical of cloud, whereas the business side tends to be much more open to it,” Hirsch says. “In fact, perhaps the bigger issue is that the cost of entry is so low and deploying cloud solutions is so easy that it can result in ‘shadow IT’ deployments across the organization that is hard to manage.”

Hirsch also stresses that cloud is not an “all or nothing” proposition. “Cloud can augment components of technology that are already in place internally in IT organizations,” he says.

“To me, it’s not a choice of ‘yes or no,’ it’s a decision of to what extent cloud should be utilized,” Hirsch adds. “If insurers are looking for new solutions to address business problems, cloud should definitely be an option.”

Enterprise Cloud Computing

One insurer that is a strong proponent of cloud computing is Pennsylvania’s Harleysville Insurance. Harleysville CTO Steve Byrne will reveal how his company has leveraged the technology across the company in today’s session, “Check in and Take off: Cloud Computing and the Enterprise.”

Byrne reports that Harleysville uses cloud computing on both the platform and application levels. On the platform level, Harleysville has completely outsourced its mainframe, freeing the company’s IT staff from the capital expense of having to maintain and upgrade hardware.

Additionally, the cost model of a platform cloud means the insurer is only paying for the capacity it uses. “We no longer have to purchase excess capacity just to be sure we have the resources necessary to build, test, and operate applications,” Byrne says. “We’ve been able to reduce support needs around people, software and other mainframe infrastructure components because they are no longer housed in our data center.” 

Harleysville also makes extensive use of cloud-based software-as-a-service (SaaS), particularly in non-core areas. Byrne will explain how using SaaS in areas such as HR, expense management, and credit card processing has helped the insurer reduce expenses while eliminating the need to support and upgrade software.  “Insurers should seriously consider SaaS for utility-type applications,” he says.

Lastly, Byrne also will detail how Harleysville is building a “private cloud” within the enterprise. “Currently, we’ve virtualized more than 60 percent of our data center,” he says. “Our next phase of development will be to diversify our assets across other data centers, using the private cloud to co-locate those assets.”

Audience members will learn from Byrne’s view of both near- and longer-term opportunities of cloud computing, his first-hand experience, how Harleysville views key areas of cloud, including risks and mitigations.

Content in the Cloud

The cloud is ideally suited for storing and sharing content with a widely distributed user base. Serving that user base was an objective targeted by Global Aerospace, the world’s largest aviation insurer.

With worldwide operations, the insurer had faced an acute problem when trying to share information and collaborate on content across distributed offices. “While using email was fine for simple interactions, we were essentially breaking the workflow to move documents from one user to another. We had no good way to manage content centrally,” says Tom Assenza, senior vice president and IT services manager, Global Aerospace. 

Globally distributed content posed particular challenges for the insurer’s claims operation. “Information we thought was only contained in the U.S. was actually replicated in other offices worldwide,” Assenza explains. “We couldn’t easily maintain version control or establish an audit trail when moving documents via email.”

How Global Aerospace solved that challenge is the focus of Assenza’s session, “Using the Cloud for Worldwide Workflow & Content Management.” Starting with the claims process, the insurer deployed Hyland Software’s OnBase enterprise content management (ECM) solution. The deployment connects content distributed in two main repositories—one in London and one in New Jersey—that are accessible to users across the globe in real-time.

Since OnBase is integrated with the insurer’s claims administration platform, users have a complete view into customers’ claims from a single platform. The insurer has achieved objectives around collaboration, content access, and version control.

“Today, a claims manager in Paris and one in Chicago can view and collaborate on the same claim file in real-time,” Assenza says.

The company has also enhanced its ability to investigate and analyze loss, leading to better claims outcomes. As a result, interest in the platform has grown, with Global Aerospace continuing to deploy the OnBase system to other processes. Assenza will detail these and other benefits in today’s session.