Insurance industry to increasingly use cloud computing
Going forward, look for the insurance industry to increasingly adopt cloud computing so it can offer more affordable, more flexible services. Cloud computing refers to any web-based service that is an “expandable and on demand resource,” says Andy Scurto, president of ISCS, a software and services provider for the property-casualty insurance industry.
Some insurance agencies have implemented cloud services without realizing it, shows a recent Virtacore Systems survey. In the survey, about 54% of those using web-based software for email, CRM, productivity, or conferencing did not identify them as cloud applications. “People are starting to realize that cloud computing can save a lot of money and a lot of headaches, and can basically give you a lot more solid infrastructure with a lot less cost,” Scurto says.
However, some insurance agencies seem wary of cloud computing for security reasons. “I think the industry is a little bit reluctant to move to cloud-based solutions for fear their data is hosted somewhere else, but it’s much more secure for me to host my data on servers managed by professionals that are constantly looking at security and backups,” asserts Roper DeGarmo, president of Signature Personal Insurance.
“Cloud computing is a great tool for disaster preparedness and recovery," adds Angelyn Treutel of Treutel Insurance Agency in Bay St. Louis, MS. “I no longer have to be concerned about tape backups or software updates because all of those processes are handled by the host of our application service provider (ASP).”
Those who really “embrace” cloud computing and maximize its services could save 25% to 50% in certain areas, according to Scurto. Cloud computing is cheaper than internal hardware, Scurto explains, because a flat fee pays for the services and a vendor to maintain the system, and it only incurs cost while running.
By contrast, an IT infrastructure is a huge financial commitment, costing between $500,000 and $2 million — not a viable option for small or start-up agencies, according to Scurto. He says hardware has a life of 18 months to two years, while cloud services are easy to keep current. “With cloud computing, you can fire it up at a very low cost, start out very easy with two or three servers to get running, and as you get success, add to it very quickly," he relates.
Signature Personal Insurance in Mission, KS was built completely with cloud computing services and is now a fully virtual insurance agency, DeGarmo claims. His agency “functions as a national agency with the budget of a local shop” by using online tools such as Dropbox, which DeGarmo describes as an online filing cabinet.
“[Cloud computing allows] people to do whatever they want to do, whenever they want to do it,” Scurto says. “The data centers that need to be shut down at night for backups and such aren’t acceptable anymore. We’re moving toward becoming a much more 24-hour/day kind of economy. Cloud infrastructures can run 24/7, and allow people to work from home or anywhere.”
‘Cloud’ computing brightens IT skies for insurance agency owners (http://ifawebnews.com/2011/02/22/cloud-computing-brightens-it-skies-for-insurance-agency-owners/). Insurance & Financial Advisor, February 22, 2011
‘Cloud’ computing brightens IT skies for insurance agency owners (http://multiplatform.org/2011/02/22/cloud-computing-brightens-it-skies-for-insurance-agency-owners/). Multiplatform.org, February 22, 2011