It's not a new concept in insurance, but agility is the word I predict insurance technology executives, their solutions partners, and other industry watchers will most frequently use (and overuse) in the coming year when they talk about IT-related challenges and imperatives. The ability to move quickly and nimbly in response to market opportunities and challenges -- whether they involve new or changed regulation, enticing markets and customer segments, or looming competition -- has for years been a prized but elusive capability for insurance companies. They've been held back by legacy systems, fractured and siloed infrastructure, clunky databases, and turf-focused organizations.
These conditions are becoming less burdensome for a variety of reasons. Insurers are investing in modern core systems, there's significantly more collaboration across most insurance enterprises, and innovation is being "institutionalized" and incorporated into the organizational culture. But perhaps the most important development that's making agility more than a buzzword is the increasingly widespread adoption of cloud (both private and public), virtualized, and hosted systems in insurance -- the theme of the latest Insurance & Technology issue.
Beyond their appeal as variable-expense and cost-effective computing models, cloud-based and other as-a-service and virtualized methods let businesses (including insurance) transform their approaches to market changes. Resources can be deployed more readily to where there's a high-priority need, whether it's responding to a natural catastrophe, entering a new market, supporting the annual report process, or developing mobile apps. This requires more than a platform, of course; intellectual capital, regulatory approvals, IT governance, and robust core and point solutions also come into play. But cloud and virtualization are the keys to making it possible.
That's not just because their economics may free up resources that can be invested in leading-edge IT talent, analytics capabilities, digital channels, and other elements of a 21st-century growth strategy. They also remove long-standing infrastructure and organizational barriers to agility. In fact, the cloud's potential to enable insurers to be more flexible and responsive to market opportunities will make it essential to any IT organization, according to Joe Weinman, senior VP of data services company Telx. He noted at the recent Interop New York conference, "We live in an increasingly digital world, so IT and a cloud form of IT is imperative."
If there's an elephant in this room it's lingering concerns about the security of running corporate systems in the public cloud. But as insurers recognize that agility is attainable and use of cloud and hosted systems becomes more about strategy and less about cost-cutting, security will become an operational issue, not a barrier to adoption. A new era of IT is here.