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

Figure 1-Percent of CIOs 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 CIOs 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 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

The above diagrams can be removed as they dont convey any new
information thats not already been discussed.
Figure 3-Private vs Public Cloud
(Image Source: TalkCloudComputing)

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
2. IT companies in cloud computing

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 customers 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

security issue is addressed regulators will also be convinced on the usage of

cloud in In spite of the challenges insurance.
As the benefits outshine the challenges cloud computing will be the catalyst
for the growth of insurance industry in future

References
https://www.in.capgemini.com/resource-fileaccess/resource/pdf/Cloud_Computing_in_the_Property___Casualty_Insurance_Indust
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http://www.livemint.com/Companies/3M7Z1WrbnbZCE6NCT6qhfO/TK-Kurien-Wiproplans-to-create-a-subsidiary-for-cloud-co.html