Enterprising Developments

Good Candidate for Cloud: Anything That Can be Automated

Joe McKendrick
Insurance Experts' Forum, June 25, 2010

What types of insurance work are “commoditized”—meaning everyone does it, so there's no competitive value in it—and thus ripe for more cloudy type platforms?

I had the chance to run these questions past Krish Khambadkone, client architect for Infogain, a global systems integrator involved in implementing solutions across the insurance industry.

 

Khambadkone says in the cloud examples he's seen, insurance front-end quoting functions have been the most likely candidates for cloud sourcing to external vendors. He cites one vendor in Southern California that operates a “hybrid cloud” specifically for such tasks, which serves a number of insurance companies. Which means the vendor hosts and runs the software, but the applications and server instances are dedicated to the clients, and not shared as publicly available services.

He adds that front-end quoting is a highly commoditized and routine function that lends itself to such approaches. “Processes involved in the issuance of a quote for many commonly issued policies, such as medical, auto, casualty, property are quite standard and follow a set pattern,” Khambadkone explains. “Broadly speaking, it involves submission of questions, rating and pricing, underwriting, binding and quoting.”

The cloud model lends itself well to applications in which workflows can be automated. “There is no more need for a human actuary to rate and price a quote,” he points out. “These are achieved through straight-through processing; even the pricing is done using sophisticated pricing engines that use vast amounts of statistical data, algorithms and factors to arrive at the quote.”

Khambadkone hits at something here. There has been quite a bit of uncertainty about cloud within the insurance industry, and it doesn't make sense to take those systems and processes that offer competitive advantage and hand them over to a third party. But there are those many commoditized and automatable processes in which the pains and expenses of maintenance and upgrades could be handed to someone else to worry about. 

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

Driving Growth Through Distribution Management

In the current hyper-competitive marketplace, many carriers are focusing on improving their distribution practices as a key technique for driving growth.

The Start of a New Era: Digital Retailers and Insurance

Insurers from all around the world are making great efforts to become digital.

Google and Insurance: One Year Later

Google is getting the approval for selling insurance on their compare site in a large number of states via a number of different insurance partners.

How IT Managers Can Get Close to Policyholders

Four steps CIOs need to take to lead insurance organizations to greater “customer obsession.”

Strategic Initiatives for 2015: Making Sense of the Shifts

Insurers must choose between embracing innovation or just continuing with business as usual and run the risk of becoming a casualty in the new competitive battle.

To Stay in the Game, Insurers Must Aggressively Embrace New Consumer Technologies

Emerging technologies displayed at the CES could be some of the greatest change agents since the introduction of the Internet, offering breakthroughs that could challenge many businesses.