Insurance companies still spend a lot of money maintaining the infrastructure for their core legacy apps. This is an opportunity cost for them as they could have spent that money to change and innovate on other fronts like new product development, distribution channels and customer experience.
Although risk averse in terms of adopting a new technology, insurance providers are now at an inflection point in their transformation journey. While many insurers already have SaaS-based ancillary apps, about half of them have either started or are actively considering core applications like claims and policy admin for cloud migration, according to Novarica. Property and casualty insurers seem to be ahead of the curve in comparison to the life insurers.
While many cloud-mature insurers have replaced their home-grown core legacy apps with packaged SaaS ones, there are some who chose to instead re-host or re-architect their core apps to a cloud platform. You might choose to re-architect apps for PaaS if your core applications are strategic, unique to your organization and provide a competitive advantage.
Going beyond a “lift and shift” strategy with Infrastructure as a Service and focusing on Platform as a Service (PaaS) is the next step for insurers in gaining cloud maturity. Applications hosted in the cloud cost less to maintain, are easier to change and enable the business to move quickly – like, for example pushing out new functionality faster for customers looking to file a claim.
The advantages of deciding to move to cloud are a no-brainer, but the majority of insurers are in a for a rude awakening when they actually get into the nitty gritty of migrating core applications. The ease or difficulty of moving any application to the cloud depends on how it was designed. In some instances, not a great deal of effort is required to redesign the application to effectively manage tenancy — usually because the application already uses a distributed design that can be easily decoupled. However, most core applications aren’t designed this way. They are tightly coupled, monolithic applications that have to be pulled apart and redone to become an effective and efficient cloud-based app. Most companies underestimate the enormity of this task, and by the time they figure this out their projects have already spun out of control.
To avoid that fate, insurers need clear visibility into what it takes to turn a traditional application into an efficient and cost-effective cloud-based app. CAST recommends that insurers conduct an assessment of their architectural cloud readiness to gain insights into the blockers that will impede or boosters that will accelerate their move to cloud. An assessment will help line of business leaders prioritize and monitor their progress over time so that transformation programs don’t get out of control. On Oct 12th, Novarica and CAST will partner up for a webinar digging into the above topic.
Novarica’s Mitch Wein (Ex-CIO at AXA) will bring insights into the state of transformation in the insurance industry, CAST Highlight’s Jeff Fraleigh will delve into best practices for measuring and monitoring the cloud-readiness of monolithic core applications.
Register now to attend the event and receive the webinar recording.