The Case for Performing Resource-Intensive Calculations in the Cloud: Learning from Early Adopters
Cloud adoption across the insurance industry for core processes is still in its infancy. Many insurers simply are not ready to jump into the cloud movement with both feet, especially when it concerns core processes and customer data. However, there is one area of their core business where insurers appear to be more willing to explore, and that is not related to ancillary support services, such as HR. This area is resource-intensive calculations, such as actuarial and risk modeling.
In the report The Case for Performing Resource-Intensive Calculations in the Cloud: Learning from Early Adopters, Celent explores how early adopters are starting to utilize the cloud for risk modeling, pricing, and actuarial modeling. Areas of focus within the report include:
- The model deployed, whether on premise or off premise, whether for development or production, and whether for bursting or everyday use.
- The business case and realized result, including hard and soft measures.
- Security implications, real and perceived.
- New capabilities required and existing capabilities rechanneled.
- Implementation approach.
- Stakeholder engagement.
Qualitative interviews were held with five early adopters, across Europe and North America.
This report aims to provide a deeper understanding of both the financial and practical implications faced by insurers when considering moving to the cloud for their resource-intensive actuarial and risk modeling calculations. The report is intended to provide a balanced argument for insurers considering how to develop their own business case, learning from those who have already made the move.
“Cloud adoption across the insurance industry for core insurance processes is still in its infancy. Many insurers simply are not ready to jump into the cloud movement with both feet, especially when it concerns core processes and customer data,” says Jamie Macgregor, Senior Vice President of Celent’s Insurance practice and author of the report. “However, for some, actuarial and risk modeling represents one of the more readily accepted use cases. Early adopters are starting to apply the technology to good effect and, in doing so, opening the debate internally for further adoption as they become ever more comfortable.”
Learning from early adopters, venturing into the cloud for actuarial and risk modeling can provide some insurers with a simpler entry point. It can also be an opportunity to provide a significant capability uplift for both business and IT teams, enabling greater control over environments that, for some firms, have historically been managed outside of IT. Finally, the experiences of the five early adopters involved in this study suggest that the benefits can be significant, providing risk and cultural acceptance can be managed.
This report was commissioned by Microsoft, which asked Celent to design and execute the study on its behalf. The analysis and conclusions are Celent’s alone, and Microsoft had no editorial control over the final report contents.
This 24-page report contains four tables and two figures.