Cloud 101 for Insurance Agencies: Four Myths We Can All Do Without

By Adam Stern | Insurance Tech Insider

Cloud migration involves placing data and applications off-premises and online, shifting the focus from locally-based technology to remote access and deployment. While some insurance brokerages are likely to continue buying hardware, the pace of cloud migration continues to accelerate as more and more applications become cloud-ready.

What’s behind the decision to remain with an in-house solution or embrace cloud server hosting? A small to midsize insurance agency reaches that fork in the road because it has pushed its local technology to the end of its useful life and now needs to do something about it.

When tinkering with technology – or, more accurately, not tinkering with it yourself but entrusting others to handle the often-baffling mechanics – language is everything. Being able to distinguish fact from myth is a big down payment on peace of mind.  In this brief introduction to the cloud, we’ll address (and debunk) some pervasive myths.

Myths, or misconceptions, are the status quo’s best friend. It’s difficult to move forward with business technology when some of the most basic assumptions about that technology are obsolete, misguided or simply unfounded.  Here are four things your typical hardware salesperson would dearly like you to believe:

Myth: The cloud poses security risks
The fact is, your insurance business – that is, your data — is considerably safer in the cloud than parked on equipment under someone’s desk.  Any cloud provider worth its salt brings to the task a phalanx of time-tested tools, procedures and technologies that ensure continuous uptime, regular backups, data redundancy, data encryption, anti-virus/anti-malware deployment, multiple firewalls, intrusion prevention and round-the-clock monitoring.  And that’s just for openers.

Myth: Cloud migration means changing your applications and your ways of doing business
Done right, cloud computing is holistic and transparent (you might even say invisible). That is, an insurance agency’s entire compute environment can be placed – and then thrive — in the cloud, and employees can access applications and data wherever they are.

Outwardly, virtually nothing has changed.  And, because cloud migration is all about ensuring continuity — moving from an on-premises IT presence to a hosted environment under the care of cloud specialists — no internal processes and procedures need to change, either.

Myth: Cloud computing costs more than on-premises computing
Increasingly, the numbers favor the cloud – and numbers are just part of the equation.  Indeed, the cloud has become a genuinely good value.

Because the cloud requires zero outlay for computer hardware and (typically) modest monthly fees for applications and maintenance – with such under-the-hood essentials as storage, backup, security, disaster recovery, round-the-clock support, etc. baked in – the economic argument is compelling.  With depreciation cycles taken out of the equation, compute horsepower truly is a bargain.

It’s entirely possible for a small or midsize insurance brokerage to spend $10K a month and tap enough compute power to drive a 1,000-user organization – certainly more than most actually need, but a comforting statement about economies of scale.

Myth: The cloud makes compliance issues more difficult
In countless areas of the insurance business, compliance isn’t optional.  And that often means achieving it is viewed as burdensome, especially for agencies of modest size.

Because cloud providers are literally wired for security (see Myth #1), migrating to the cloud turns out to be the surest route to painless compliance, whatever the specialty.  Indeed, cloud-based hosting plans incorporate technologies that fully address today’s regulatory environment, all organized around privacy, security and breach notification.

While insurance brokerages might be capable of doing various techy things on their own, most would prefer not to do the heavy lifting in-house.  And who can blame them? Even though myths die hard, the experience of cloud migration is proving to be a wise way to ensure peace of mind.

Read in Insurance Tech Insider