Why Insurers Should Consider Private Cloud

(Editor's note: Occasionally, we ask an insurance technology leader a single question to elicit a response that will enlighten and inform the technology channel readership. If you would like to participate, contact the editor at rhyle@sbmedia.com)

Vivek Gujral is executive vice president and CTO at OneShield.

Question: Why should an insurer consider private cloud services?

The advantages of cloud-based services are rapidly becoming more appealing for insurers, and now is definitely the time to consider all the options. The cloud provides insurers the flexibility to respond quickly to changing market needs and customer demands without additional investments in capital or technology infrastructure. In short, it enables insurers to react and scale quickly and efficiently.

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

With a private cloud approach, insurers access a proprietary environment where infrastructure is hosted and maintained by an outside technology provider. This approach still allows for maximum integration and configuration capabilities, while enabling lower cost services to agents, brokers and customers.  Economies are gained principally by sharing the human resource cost of infrastructure maintenance, as well as the bulk purchasing and utilization smoothing power of the cloud provider.

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

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

• Lower technology total cost of ownership (TCO) based on a shared infrastructure model between the insurer and the cloud provider;
• Flexible pricing model to best meet the insurer's needs, since many cloud providers offer the opportunity for insurers to pay only for what they use, and therefore making it easier to determine future growth costs;
• Complete oversight and administration of the environment at a third-party data center;
•  Improved redundancy and scalability.

Overall, private cloud services ease the burden of infrastructure demands while maintaining the highest levels of privacy and security. Working with an experienced, application savvy, technology provider is also important, as insurers have the added value of seasoned technical experts to fully support the software development lifecycle and the specific system integrations to optimize the deployment of applications.  Private cloud services are a win-win for insurers regardless of company size, lines of business written, distribution models, or even geographic regions served.