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‘Cloud’ computing brightens IT skies for insurance agency owners

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Correction: Cloud computer spending worldwide will reach $42 billion, not $4.2 billion, in 2013, according to IDC research. Updated 10:43 a.m. ET, Feb. 23, 2011.

The insurance industry is expected to adapt more cloud computing, which offers “affordable and flexible” services that “level the playing field and let small companies compete,” professionals say.

Worldwide IT spending on cloud computing will grow from $16.2 billion in 2008 to $42 billion in 2013, according to IDC research.

Cloud computing refers to any web-based service that is an “expandable and on demand resource,” according to Andy Scurto, president of ISCS, software and services provider for the property-casualty insurance industry.

Some have implemented cloud services without realizing it, according to a Virtacore Systems survey cited in Information Week. About 54% of those using Web-based software for email, CRM, productivity or conferencing did not identify them as cloud applications, the survey found.

“People are starting to realize that cloud computing can save a lot of money and a lot of headache, and can basically give you a lot more solid infrastructure with a lot less cost,” Scurto told IFA.

Cloud computing security

Some insurance agencies seem reluctant to use the cloud for security reasons.

“I think the industry is a little bit reluctant to move to cloud-based solutions for fear that their data is hosted somewhere else, but it’s much more secure for me to host my data on servers managed by professionals that are constantly looking at security and backups,” Roper DeGarmo, president of Signature Personal Insurance, told IFA.

One agency was able to rebound using the cloud after its in-house server was completely destroyed by flooding and wind damage from Hurricane Katrina.

“Cloud computing is a great tool for ‘disaster preparedness and recovery,’” Angelyn Treutel of Treutel Insurance Agency, based in Bay St. Louis, Miss., told IFA. “I no longer have to be concerned about tape backups or software updates, because all of those processes are handled by the host of our application service provider (ASP).”

Benefits of cloud services

Those who really “embrace” the cloud and maximize its services could save 25-50% in certain areas, according to Scurto.

The cloud is cheaper than having internal hardware, Scurto said, because a flat fee pays for the services and a vendor to maintain the system, and it only incurs cost while running.

An IT infrastructure is a “huge commitment” and costs between $500,000 and $2 million, which isn’t a viable option for small or start-up agencies, according to Scurto. He said hardware has a life of 18 months to two years, while cloud services are easy to keep current.

Scurto continued, “With cloud computing, you can fire it up at a very low cost, start out very easy with two or three servers to get running, and as you get success, add to it very quickly.”

Signature Personal Insurance, based in Mission, Kan., was built completely with cloud services and is now a fully virtual insurance agency, according to DeGarmo. His agency “functions as a national agency with the budget of a local shop” by using online tools such as Dropbox, what DeGarmo described as an online filing cabinet; Salesforce, a sales management tool; Aptela, a voice over IP phone system; and Google applications such as Gmail, he said in the Anderson Agency Report.

“[The cloud allows] people to do whatever they want to do, whenever they want to do it,” Scurto told IFA. “The data centers that need to be shut down at night for back ups and such aren’t acceptable anymore. We’re moving toward becoming a much more 24-hour/day kind of economy. Cloud infrastructures can run 24/7, and allow people to work from home or anywhere.”

This article first appeared in the February 2011 editions of Insurance & Financial Advisor.


‘Cloud’ computing brightens IT skies for insurance agency owners via IFAwebnews.com .


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