Cloud storage, the silver lining of insurers – Insurtech – Insurance News

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Embracing cloud storage allows insurers to focus on customer needs and expectations and on creating critical value for policyholders, says Frazer Walker Partner Ian Chisholm.

The cloud is becoming the platform of choice for core insurance applications because it is much more cost effective than operating in-house private data centers, as most insurers did in the 1980s-1990s.

“The costs of owning and operating these large and expensive assets to the standards now required by regulators and to meet customer expectations are prohibitive for most organizations,” Mr. Chisholm said.

“It is inevitable that insurance companies will eventually fully embrace cloud services.”

The specialized skills required of a “small army” of IT staff to operate data centers around the clock are beyond the reach of most insurers, brokers and others in the industry, he says, and maintaining those skills up-to-date and at an appropriate level of safeguard would extend personnel and training budgets.

The services offered by public cloud providers, such as artificial intelligence, machine learning and Internet of Things data processing, are “far beyond the reach of even the largest enterprises to establish in-house,” says Chisholm.

“Insurers need to focus on their core business and value creation. Being an expert in operating data centers is not one of them,” he said, adding that external providers are in a better position to build, own and operate the services delivered through the cloud.

Sydney-based management and technology consultancy Frazer Walker held executive and board-level discussions about the risks and benefits of cloud services and the trade-offs between cyber and risk operational and financial, and Mr. Chisholm says some insurance companies may be hesitant to adopt cloud services, economics and feature-rich environments are “simply too strong a proposition.”

In-house data storage remains an option for non-essential edge systems that don’t require stringent uptime, redundancy or resiliency, he says, for example, proof-of-concept systems, spreadsheets not critical and development or low level test environments could be run on local servers. Local data centers however are not immune to cyberattacks as they are usually connected to the Internet-connected corporate network.

“It’s always about testing and learning first, then redeveloping and moving to a more rigorous and robust environment as the system becomes more important to the organization,” he said.


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