By CYRIL TUOHY, managing editor of Risk & Insurance®
There's no danger of large carriers migrating their policy administration systems to the cheaper alternative of cloud-computing options. Nor are risk managers or brokers about to turn into tweet geeks anytime soon, even if it seems as if they give their BlackBerry devices more attention than they do their spouses or their clients.
Cloud computing, or Software-as-a-Service, is too fraught with control and security issues for the largest carriers to migrate thousands of complex policies on servers outside their control, according to a pair of insurance technology analysts.
"It will be quite a few years before mainstream acceptance of this from mid to large carriers," said Jeff Goldberg, senior analyst with Celent, the insurance technology consultancy. "We'll still be looking to see when people get over fears of security and control."
Cloud computing--through which the technical infrastructure, the computing platform and the applications are hosted as a service by a third party--allows the computing functions to be delivered over the Internet from places outside the physical or electronic walls of an insurance carrier.
The advantage is that carriers don't have to pay for all that computing power as it's built and maintained by other companies. Carriers only pay for what they use. Cloud computing, which has been in use commercially since the mid-1990s at least. also offers its users a lot more flexibility in terms of configurations.
NOT ALL SILVER LINING
The downside is that the carriers cede control of their data to the companies with whom they contract.
Larry Ellison, CEO of Oracle Corp., the largest database company in the world, last year dismissed cloud computing as "fashion-driven" and "complete gibberish."
Richard Stallman, founder of the nonprofit Free Software Foundation and the computer operating system GNU, has also said that computer users should keep their data in their own hands.
Insurance technologists were again reminded of the vulnerability of ceding control to a far-flung service provider when two of the most popular social networking sites in the United States were hit by denial-of-service attacks Thursday morning.
Hackers bombarded Twitter, the microblogging service used by millions, with denial-of-service attacks, disrupting the sire for at least three hours.
Facebook, an even more popular social networking site, said it was looking into reports of a denial-of-service attack, according to CNBC.
While it's clear that wholesale policy administration systems aren't about to leave the technology bosoms of the largest insurance carriers, a number of smaller transactions will likely be conducted over mobile platforms, Celent's analysts said.
The communications side of administering to policy issues--claims and billing, for example--even if not strictly part of policy administration, will likely be conducted more frequently using mobile platforms, Goldberg noted.
Light added that mobile usage would also depend on "what part of who's job is not done sitting at a desk." Much of policy administration is conducted through a desktop computing environment in a deskbound world.
"Underwriters won't be doing their underwriting job via mobile, but the agents may want to do the data entry part using mobile," said Goldberg.
August 7, 2009
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