Insurers are faced with more options than ever when it comes to housing and transmitting data, specifically any service model in which computing resources are shared and maintained on the Internet. Andy Scurto, CEO of ISCS, clarified some of the various ways and options for attendees at the IASA Educational Conference and Business Show this week, challenging them to rethink their cloud options.
“There are lots of ways to define cloud,” he said, “and we know cloud offers many advantages, including lowering costs and scalability, but what we are seeing now is a bolder move toward taking advantage of what the cloud has to offer in terms of our core systems.”
Scurto, who moderated a panel session of insurers called “Core in the Cloud,” defined the various types of cloud environments--private, public, hybrid, Infrastructure as a Service and Software as a Service--as possible options for insurers.
SaaS is one of the more perplexing for insurers, because it’s often confused with yet another element, single or multi-tenant, he said. “With single-tenant SaaS you get your own environment, with multi-tenant, you are basically renting the software.”
Jon Ritchie, SVP of Tampa-based American Integrity Insurance, one of the regional carriers that surfaced in 2006 after Florida saw larger carriers move out of state due to storm risk, told the audience that his company’s overall strategy was to evaluate its build-buy-lease options, and in-source pieces of the business where it felt it was cost effective and made sense.
“We started to look at adding a new flood product, one our legacy system couldn’t handle, and had previously outsourced our legacy system, but ended up doing more development and programming than we wanted to. We really want to be an insurance company, not an IT shop.”
After a 10-month implementation, the company runs the ISCS SurePackage (SurePower Innovation cloud delivery) suite of core products in a hybrid SaaS environment, choosing this method due to scalability, maturity and security of infrastructure. “Our leverage here is huge,” said Ritchie, “because we can take core upgrades to our systems that all ISCS customers get.” ISCS’s PowerTools component allows the insurer to perform maintenance and configure changes on the fly. “We can throw the changes over the wall to ISCS for final implementation. This way we don’t have to get down to a code level, which gives us the opportunity to leverage our core competencies.”
Bob MacLeod, AVP of Information Systems at Union Mutual of Vermont, shared a different approach to its cloud implementation. The provider of home, auto and commercial lines insurance, having just completed a refresh of its core systems (moving off the AS/400) in 2012, didn’t think it made sense to invest in having another company run its core systems, so the insurer opted for an in-house option, implementing ISCS’s SurePower Innovation.
“Looking back, if we were going live today, we would have no question about having ISCS host,” said McLeod, who admits that his company’s growth has also meant exponential growth in data, resulting in another challenge. In its fifth year of using ISCS’s “SPI” server-based core system, Union Mutual is at a point where its hardware and operating systems need to be refreshed again.
“Our systems’ response time on SPI is deteriorating rapidly, and disaster recovery is also a concern,” McLeod told attendees. With a projected increase in business and data (currently at one terabyte) the company performed a cost/benefit analysis and found the costs for both cloud and internal hosting to be surprisingly similar. The company plans move ISCS’s SurePower Innovation from on-premise to hosted by ISCS in the cloud. Additionally, the company plans to move other systems to the cloud, such as Office 365, Virtual Desktop Infrastructure, and File and Print.
“We are not making the decision to move to the cloud based on costs alone,” McLeod said. “We also are looking at scalability, security, and backup/disaster planning.” However, like any technology that matures, McLeod said he expects the cost for cloud-based services to drop.
Scurto concluded the session by reminding attendees to look at the business problem that is generating the discussion to move core systems to a cloud-based environment. “You have many choices, so evaluation of the choice that best solves your business problem is the choice to make.”
