The insurance industry worldwide is undergoing a significant change accelerated by the financial meltdown and changing demographics of its customer base. In this blog, we will discuss the challenges, approaches and possible solutions to dealing with the transformation that the industry has unwittingly entered into.

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PaaS adoption in P&C Insurance

What is PaaS?

PaaS stands for 'Platform as a Service' in Cloud computing world. It gives one level of abstraction over the basic cloud service offering - IaaS (Infrastructure as a Service) by taking care of underlying infrastructure so that the enterprise can focus on delivering business value to the end users.

Majority of the Cloud Service Providers (CSPs) offer PaaS offering apart from IaaS offerings. Open source PaaS platforms like CloudFoundry, Heroku and OpenShift are also popular.

Trends in P&C Insurance

P&C Insurance is undergoing tremendous changes currently. There is huge pressure on premium costs reduction. New products must be delivered to customers quickly to compete with the increasing number of players in the market. Also, the local players and startups are turning out to be big threats to large players in this area due to the local flavor they can bring to the policies.

For the large players to stay relevant in the current market environment, it's important that they embrace digital transformation. At the core of this transformation journey is the agility from infrastructure procurement to feature delivery.

The following will be the primary objectives of the digital transformation journey of the large players in P&C Insurance sector:

  •  Reduced time to market
  • Reduced infrastructure costs
  • Reduced operational costs
  • Improved collaboration of global teams
  • Mobile first approach to new feature delivery

All the above will require the infrastructure to be globally available at lower cost and the development processes to be very agile. So, Cloud computing becomes the natural center point of any modern large digital transformation journey. Large insurers started recognizing this important aspect and are currently evaluating various cloud adoption options.

PaaS adoption in P&C Insurance

One of the challenges of adopting cloud in Insurance sector is meeting compliance and regulatory requirements. It was relatively easy to meet them with on-prem data centers and application servers as the organization has full control over access etc. With public cloud, it's not easy to meet them due to the nature of public cloud. Hence the insurers are opting for setting up private cloud within their network with the infrastructure capacity provided in-house.

To balance the regulatory requirements adherence and modern computing pattern adoption, insurers are evaluating various PaaS options such as PCF, OpenShift, Heroku etc. This gives the organization to build regulatory compliant cloud and adopt modern methodologies like DevOps to meet business objectives. These PaaS platforms also reduce the infrastructure maintenance overhead for the organizations by abstracting the underlying infrastructure management from the developers.

These platforms offer industry standard infrastructure management options apart from the portability which is also one of the key objectives of the organization. These platforms provide the opportunity to avoid Cloud Service Provider (CSP) vendor lock-in and thus align with multi-cloud strategy of the organizations.

Observations and recommendations

While most of these PaaS platforms do offer the above-mentioned flexibility, they are primarily container driven platforms. So, there will be few applications in large enterprise IT landscape that are not good candidates for containerization. Re-engineering those apps would be preferred option but that won't be generally done at the beginning when an organization starts on modernization journey.

There will also be few data sources which the enterprise would still like to host in isolation and they source data for some of the apps hosted on these PaaS platforms. The access mechanisms are generally more secure which need to be supported by these PaaS platforms as the security at container and orchestration level also becomes key for overall security.

Based on the experience, adopting these PaaS platforms would help insurers speed up their modernization journey apart from improving developer's productivity. Respective enterprise level security patterns and nature of data sources need to be considered before choosing a PaaS platform. Integration with on-prem applications and the cost associated with such setups should also be considered before going for PaaS instead of IaaS.

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