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Imagining a Cloud-Native Insurance Data Ecosystem

With COVID-19 putting cloud migration back in the spotlight, we explore what this cloud-enabled future will mean for data and analytics leaders

Cloud migration has been a cross-industry trend for years. But now, many organizations have begun accelerating their cloud migration projects in light of the global pandemic.

New business priorities such as equipping staff for remote working and improving digital customer experiences have thrown the need for this kind of digital transformation into stark relief. In fact, our research indicates that one in three data and analytics leaders say their colleagues are more interested in cloud services today, as a direct result of COVID-19.

At the same time, research from insurance consultancy Novarica shows that 70% of insurers have now started transitioning to the cloud.

Sridhar Iyengar, Distinguished Engineer at IBM, explains: “Core business processes and insight services (this is what data scientists are trying to deliver) are now available in the cloud or edge so that the broker, claims adjuster [and] underwriter can be more effective.”

Iyengar says moving core data platforms to the cloud is helping insurers to create systems with configurable workflows and AI-powered insurance insights services expressed as microservices. This makes it easier to deliver new insurance products to market faster at a lower cost.

“New regulatory changes are another key driver of new applications and data moving to the cloud,” Iyengar adds. “Insurers and banks literally had a week to update their systems to allow citizens in Chile to request pension withdrawal [when a new law was passed in July]!”

To help insurance industry executives plan their cloud migrations, Corinium and IBM recently held a virtual roundtable with some of the sector’s top data leaders. While the event itself was held under Chatham House rules, we’ve created this article to share the ideas discussed with a wider audience.

How Insurers will Benefit from the Cloud

There are four main ways that cloud-based IT infrastructures, platforms, applications and business processes are transforming insurance.

First, the cloud lets insurers break down the tech that underpins each part of their business – such as underwriting, product development or claims adjustment. This means they can get services from different providers and reconfigure their business quickly to meet changing market demands.

At the same time, migrating insurance company applications to the cloud helps to ensure they’re standardized across the enterprise and available to staff whenever they’re needed.

Tony Kerrison, former Head of Infrastructure Services at ING, explains: “ING is very keen to deploy cloud computing technology – essentially the separation of applications from the underlying infrastructure – and to get to a point where technology is a service easily, efficiently and effectively provided to the company, regardless of location.”

"Insurance Industry data scientists have to spend anywhere from 60-80% of their time preparing , cleaning and transforming data in inflexible systems of record"

Sridhar Iyengar, Distinguished Engineer, IBM

But it’s the cloud’s potential to enable powerful analytics capabilities that will be most exciting for many insurance data and analytics leaders. Cloud-based systems can accelerate analytics maturity through integrating vast amounts of data in one place and making it available to the business.

“One of the major challenges I see quite often within organizations is that they have a lot of data and data gathered all over the place,” notes Alan Luu, AVP of Advanced Digital Analytics at Chubb. “They don't have a way to consolidate, validate and centralize the data.”

In today’s socially distanced, digital-first business landscape, laying the groundwork for advanced analytics is more important than ever. This brings us to the fourth potential benefit of investing in cloud technologies: providing superior customer experiences.

As insurers race to update digital customer experiences for the age of COVID-19, many are harnessing the cloud to build personalization engines, conduct customer behavior analyses and refine data mining algorithms.

Answering the Cloud Security Question

The insurance industry may be embarking on its cloud transformation. But Novarica’s research shows that most have so far only moved certain segments of their enterprises to the cloud.

As Iyengar and IBM Global CTO, Industry Platforms Al Hamid were keen to point out at our virtual roundtable, security and compliance are two of the top ‘blockers’ slowing the industry’s move to the cloud.

Of course, it’s possible to store customer information on the cloud securely and in compliance with global privacy regulations. But a lack of knowledge and certifications means many insurers are moving forward cautiously.

“We already have  the cloud, but with a lot of restrictions and limitations,” explains Dante Tellez, CDAO at Chubb. “[Governance] limitations, many times, are not allowing my algorithms to work properly.”

“In terms of the storage, we have that solved on the cloud,” he concludes. “But the entire flow is not yet done.”

Significant investment in Identity Access Management (IAM) skills and strategy development will be needed to overcome this challenge. This must include new processes to mitigate the risk of human error as insurers get used to sharing responsibility for information security with public cloud providers such as AWS.

Application security must also be reviewed as systems are moved to the cloud. This should include considering the best methods for secure authentication, data encryption standards and network penetration testing.

Finally, interfaces and their associated business processes should be well-defined and approved by business stakeholders.

Ensuring IT security, data and analytics capability roadmaps are aligned will be essential for the efficiency of this migration. But executives who manage their companies’ cloud transformations efficiently will empower their data scientists to solve key business challenges in the age of COVID-19.