The Record - Issue 9: Summer 2018

88 www. t e c h n o l o g y r e c o r d . c om I nsurers are finally embracing the cloud with conviction. A key reason is that it is abundantly clear that operating in the cloud is an essential part of an effective digital strategy. Cloud plat- forms and services support a host of digital inno- vations that are pivotal to the next generation of insurance. Another no less compelling reason is the growing realisation by insurers that they will never fully benefit from their investments in more customer-focused business models if they don’t design their enterprise applications to take full advantage of the cloud. Cloud computing is a vital vehicle for digi- tal innovation that promises to dramatically change the insurance industry. Digital channels, self-driving cars, blockchain, wearables and advanced analytics systems, to name a few, all depend on cloud technology. Looking forward, the very ubiquity of cloud, cloud tools and innovation is the foundation for the emerging B2B and B2C ecosystems that will radically change insurance distribution. These ecosystems are networks forming around funda- mental human and organisational needs such as health, housing, mobility and wealth protection. Insurers need a cloud-enabled business platform to participate in the new ecosystems. What is a cloud-enabled business platform? It is one thing to have your enterprise applica- tions running in the cloud and claim they are cloud-enabled, and another thing to have your operations supported by applications built on cloud-native services. A large number of insurers still rely on decades-old mainframe systems and legacy applications. Some have been able to take their legacy core applications and with a ‘lift and shift’ approach host them in a cloud environment. The results of this process are mixed. While real sav- ings can be gained in reduced infrastructure cost, the applications are their same old selves. What’s more, converting old code to run in the cloud can be complex and expensive, making it one of the biggest hurdles for modernisation. To take full advantage of the cloud, insurers will need soft- ware designed for it: a cloud-native architecture. Without adopting a cloud-native architecture, insurers will likely never fully benefit from their gung-ho investments in building more customer-focused business models. Many will struggle to compete against or leverage the market agility and penetration of digital natives like Amazon, Google, Facebook and Alibaba to distribute insurance in the emerging ecosystems. Why insurers’ digital strategies depend on the cloud Successful customer-focused insurance business models require embracing the ubiquity of cloud innovations and leveraging the power of cloud-native design for enterprise applications M I K E DWY E R : E I S GROUP V I EWPO I NT “Cloud computing is a vital vehicle for digital innovation”