The insurance industry has a longstanding record of IT use. So it's no surprise to hear that this sector is a large consumer of cloud computing. What's interesting, though, is how clouds are actually reshaping the insurance business itself -- and what that indicates about the potential for clouds to change other sectors.
Take one example: In a recent announcement, DynaFront Systems Berhad, an insurance firm in Malaysia, revealed its choice of the IBM PureSystems platform for its own Web-based cloud services. The reason for creating this cloud isn't just to streamline applications and reduce capital and operating costs, the insurer said. The customers served by the company, who used to rely on face-to-face meetings with insurance reps, now don't want to communicate anywhere but on the Web.
"We selected the IBM platform to launch our new offering because we recognized the game-changing role PureFlex System can play not only in how we run our back office, but also in how it enables the industry to build relationships with its customers," said Chan Eng Lim, chairman and CEO of DynaFront.
In an area such as Southeast Asia, where consumer insurance sales are on the rise, it's vital to offer prospective customers access to information online in real-time -- followed by forms that let them complete the process of buying coverage easily in a digital format. If they can't get this access easily from one broker, they'll move to another firm's site.
The insurance business isn't unique in having moved its favored customer interface to the Web, but the way cloud computing enables Web applications to be set up quickly and flexibly across distances has made clouds an ideal solution for delivering that interface. In an article a couple of years back, the IT services firm Accenture put it this way:
For many industries, insurance included, the increasing importance of cloud computing derives from its fit with current business priorities: it provides the capabilities businesses need on a flexible basis, helping companies respond quickly and cost-effectively to changing conditions.
In another instance showing the happy marriage of insurance and clouds, the software provider Applied Systems Inc. boasts that its insurance customers prefer cloud services because they find the cloud approach makes applications more secure and easier to manage.
"Agents and brokers have realized that moving to a cloud-based environment affords them greater security to minimize business risk, and it enables them to drive greater growth and profitability," said Applied Systems CEO Reid French. "Cloud-based software allows insurance professionals to focus on the business of insurance so they and their customers benefit from the advantages of a SaaS-based system."
The idea that clouds can effect real change in the nature of business isn't just a publicity plug. The software-as-a-service pioneer Salesforce.com Inc. offers specialized solutions for the insurance industry, as do a range of other vertical SaaS providers.
Clouds have changed the insurance business and continue to change other kinds of businesses. How have these services changed yours?
With all data available in the cloud through a standard interface, even if its only for a 10 person department, you can both integrate, but also create more freely.
This is a great point, jabailo, and it appears to be why platform-as-a-service appears to be getting so popular.
Those are benefits of web and information technology in general though, not clouds.
It seems that where the cloud architecture benefits is in the cost of setting up new data centers in each region a company wants to serve.
And secondly, the software as service model means fewer "internal firewalls" between applications.
Gone are the days when a small department gets a LAN and builds a unique "workgroup application" that has its own database and the only way to network it is through cumberson import and export processes.
With all data available in the cloud through a standard interface, even if its only for a 10 person department, you can both integrate, but also create more freely. Because the cost of setting up a new app for that department no longer requires hardware or even software purchases, but probably fees and per use costs more like time sharing on a mainframe, if there is any cost at all (could simply be a fixed amount of service dedicated to each manager...)
Ha! Too right, Chris. It certainly seems that instead of passing along their savings to customers, insurance providers have simply pocketed the savings and moved on. Something to think about.
Interesting observation, Kicheko. Brokers certainly cost insurance firms, and they were typically the source of lots of those added costs of personal visits and interaction that defined the "old fashioned" insurance business.
Another positive aspect you might think would come from cloud based enterprises would be cost savings on insurance premiums, from my perspective this is NOT been the case.
The biggest benefit of cloud business may be the fact that businesses have been enabled to cut out brokers. Especially a business like insurance usually has a lot of brokers who sometimes mislead customers and they end up with losses that can not be compensated because they had the wrong agreement. If customers can just reach the end provider directly, a lot of these can be avoided.
I haven't heard of stock market business go to the cloud fully (aside from NASDAQ) ...i think it would help cut out a lot of fraud too, though it could mean loss of business for a lot of brokers.
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