By Prateek Vijayvergia, Senior Vice President, Technology Services, Xceedance
The Indian insurance sector, though still an underpenetrated market, is poised to reach an impressive market size of $222 billion by 2026, driven largely by a growing middle-class population. Effective use of technology will be a critical factor in helping insurers expand, helping them to meet evolving consumer needs and ensure proper customer service.
That said, many insurance firms in India and across the globe are still using outdated legacy systems to manage aspects of their operations, including policy administration, claims management, and customer service. This reliance on outdated systems and technologies can make it difficult for insurers to keep pace with the rapid changes in technology and compete effectively in the market. Additionally, upgrading and integrating these systems effectively and ensuring seamless collaboration with third-party systems is a major challenge, requiring significant investments in both technology and resources.
While multiple industries are using the public cloud to migrate from legacy systems, this can be challenging for Indian insurance firms as they are subject to a variety of regulations that require them to protect customer data and store it within the country. Public cloud providers may not be able to meet the specific compliance requirements of insurance firms, which can lead to regulatory penalties and damage to a company’s reputation. Additionally, insurance firms often use multiple systems and applications, making it difficult to integrate data and processes. Public cloud providers may not be able to support the specific integration needs of insurance firms, which can lead to inefficiencies and reduced productivity. Hence, while public cloud computing offers benefits for insurance firms, it also comes with certain challenges and risks that need to be considered.
The advantages of hybrid cloud architecture
A hybrid cloud combines public and private cloud components with on-premises
infrastructure to build a single, secure, flexible, and optimal IT infrastructure. Hybrid
cloud architecture is becoming increasingly important in the insurance sector, as it
provides a flexible and scalable solution for managing complex IT environments. The
benefits of hybrid cloud architecture include:
Phased Migration: Legacy systems often contain a large amount of critical data that must be carefully migrated to new systems. A hybrid cloud architecture provides a phased approach for migrating from legacy systems, allowing insurance firms to move critical data and applications incrementally to the cloud while maintaining their existing systems. This approach minimises the risk of data loss or disruption to operations and allows insurance firms to evaluate new systems and processes before fully implemented.
Cost Savings: Legacy systems are often expensive to maintain, and their aging technology can lead to increased costs and reduced efficiency. By migrating to a hybrid cloud architecture, insurance firms can reduce their IT costs and improve their overall efficiency, as cloud-based systems are often more cost-effective and easier to manage.
Improved Scalability: Legacy systems can be limited in terms of their scalability, making it difficult for insurance firms to respond quickly to changes in demand for their services. A hybrid cloud architecture provides insurance firms with the scalability they need to meet changing business needs, as it allows them to expand or contract their IT resources quickly and easily.
Increased Agility: Legacy systems can be slow and cumbersome, making it difficult for insurance firms to respond quickly to new business opportunities or changing market conditions. By migrating to a hybrid cloud architecture, insurance firms can improve their agility and speed of decision-making, enabling them to access and analyse data quickly and easily.
Enhanced Security: Legacy systems can be vulnerable to security breaches, which can result in the loss of critical data and a loss of trust with customers. Hybrid cloud architecture provides enhanced security for insurance firms, as it allows them to store sensitive data in a private cloud, where it receives protection from cyber threats, while non-sensitive data can be stored and processed in a public cloud.
Migrating from legacy systems to a hybrid cloud architecture can provide insurance firms with the benefits of cloud computing, including improved scalability, cost savings, increased agility, and enhanced security. By taking advantage of the benefits of hybrid cloud architecture, insurance firms can remain competitive in a rapidly changing market and provide their customers with the services they need to succeed.
