Most insurers are using cloud as some component of their infrastructure, showing rapid adoption of the technology, accoding to new research from insurance tech analyst firm Novarica.

The company surveyed 89 insurance companies for its Cloud Adoption in Insurance: Trends and Issues report, 27 of which had more than $1 billion in premium. Those larger companies are more likely to have at least some cloud infrastructure, with only 4% of them saying they had none compared to a quarter of their smaller counterparts. However, a similar percentage companies said they had "most" of their infrastructure on the cloud: 11% of larger companies and 13% of smaller companies.

For the purposes of this report, Novarica asked solely about infrastructure- and platform-as-a-service deployments, from providers like Amazon Web Services, Azure, Google, Force.com and Bluemix. The scope did not include dedicated hosted servers, traditional infrastructure outsourcing or software-as-a-service applications. The idea was to find out how the scalability of the other as-a-service models assisted insurers.

"The most common applications are portals and analytics, which benefit directly from massive variable scalability and Web-native architectures," writes survey author and Novarica president Matt Josefowicz. "Some of these initiatives [also] include insurers that shifted their development and testing environments to cloud and others that are running their entire infrastructure on cloud. Applications being deployed by these insurers and others include operational data stores, imaging and workflow, and core systems for new products."

Novarica noted that the popularity of software-as-a-service has made insurers more comfortable with similar models, and those that have dived into these other cloud areas are planning to increase their use of it this year. Cloud will be used more for claims and financial management, the company finds, indicating increased comfort with it.

That could be related to Novarica's findings about security. Only 28% of respondents said that security concerns are a disadvantage for the cloud, and many insurers celebrated the fact that cloud providers can employ more security-focused staff than any carrier could on its own. Flexibility and scalability was the largest-cited advantage of cloud, with integration being the highest-reported challenge.

"Insurers are realizing value in scalability, flexibility, and speed. Adoption and planned adoption rates are soaring compared to a few years ago," Novarica writes. "But application design and management practices need to evolve to take advantage of cloud, which requires different skills and experience. Business expectations and oversight need to be adapted as well to ensure that costs and risks are understood and managed effectively."

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Nathan  Golia

Nathan Golia

Nathan Golia is editor-in-chief of Digital Insurance. Nathan.Golia@sourcemedia.com