Cloud computing in today’s world is a necessity for organisations small or large across all business verticals. The Life Insurance industry, owing to its nature of business, which is risk-prone, competitive, financially sensitive, heavily regulated, and seasonal, has immensely benefitted by leveraging cloud computing and scalability. Cloud computing helps us to enhance efficiency, agility, time to market, partnerships, resilience, and cost-effectiveness.
Among many others, the most important benefit of cloud computing is the efficiency gained in flexibility and agility in terms of both horizontal and vertical scalability. Cloud computing allows life insurance companies to dynamically scale their infrastructure resources based on demand. The nature of the business requires managing a surge in policy purchases during financial year endings, processing claims during any busy period (COVID etc), or expanding to new markets, and the cloud provides the flexibility to scale up or down computing resources as needed. This scalability ensures insurers to quickly respond to fluctuating business demands without overprovisioning for or underutilising their IT infrastructure.
On-demand scalability leads to savings on the cost of infrastructure which otherwise needs to be reserved for scalability. The pay-per-use model allows to reduce of significant upfront investments in hardware, software, and data centres and transfers the responsibility of infrastructure maintenance and management to cloud service providers. In this arrangement, we can make use of the most advanced and/or optimum infrastructure at any point based on the need and don’t need to fall back on dated infra and technologies procured historically and reserved for such times.
The availability of enhanced infrastructure empowers insurers to offer a superior customer experience. By leveraging the cloud’s agility and scalability, insurance companies can rapidly conceptualise, test and deploy new products and services, update policy information in real time, and provide selfservice options to policyholders. Cloud-based applications also ensure seamless availability across devices, enabling customers to access their policies, file claims, and make payments conveniently from anywhere, anytime, thus enhancing overall customer satisfaction.
Resilience is one of the key matrices that measures the efficiency in service delivery for any insurer. Cloud computing provides built-in redundancy and disaster recovery capabilities. By replicating data and applications across multiple data centers, spread across different seismic zones, insurers can ensure business continuity in the event of a localised failure or natural disaster. Cloud service providers employ sophisticated backup and recovery mechanisms, minimising downtime and data loss risks to near zero as part of their service offerings.
Security and regulatory compliance are paramount in the insurance industry. Cloud providers have robust security infrastructure, including secure data centers, firewalls, encryption techniques and intrusion detection systems, ensuring a higher level of protection for data at rest, in transit and in process than many individual organisations can achieve on their own. This facilitates seamless collaboration and integration with external stakeholders in the insurance ecosystem while not becoming vulnerable. Insurers can securely share information with agents, brokers, and customers from any location, promoting a more efficient and collaborative working environment while being compliant to regulations. The ability to securely integrate with third-party applications, allows insurers to leverage advanced analytics, artificial intelligence, and machine learning solutions to extract valuable insights from data and enhance decisionmaking processes. By partnering with leading cloud vendors, we can leverage their expertise and robust compliance frameworks, ensuring adherence to industry standards and regulatory mandates most of the times as a standard upgrade embedded in the services.
While ‘Technology’ may continue to chart out umpteen advantages of cloud, all of that comes with a word of caution for ‘Business’. Unless organisations are very diligent with their usage plan, pattern, monitoring and control of cloud services the cost can bleed the balance sheet. Hence, FinOps is an integral part of cloud journey for any organisation.
FinOps helps organisations track, control and optimise cloud spending through a well-defined data driven decision making process. By implementing a combination of putting spending limits to prevent cost overruns, monitoring and alerting on expense threshold breaches it enables real time cost control on one hand while optimises cloud infrastructure and services by identifying cost-saving opportunities, such as eliminating idle resources, using auto-scaling, and implementing cost-effective storage options. FinOps forms the most relevant function in bridging the gap between IT and finance by aligning cloud spending with its achieved business goals. It breaks down costs by service, resource, department, and project (Cost Analysis) thereby fixing accountability on spends (Cost Governance).
Views expressed by Pankaj Gupta, Chief Technology Officer, Bharti AXA Life
