By Ronen Ram and Robert Dan Yanovich (Image credit: Shutterstock.)
The global COVID-19 (coronavirus) outbreak has impacted the insurance and financial services sectors. As with other business verticals, insureds expect continued support while many insurance IT teams are rapidly transitioning to work from home (WFH).
The widespread effects of the coronavirus are an important reminder about the vulnerability of systems in the face of unpredictable threats. Crises such as earthquakes, pandemics and other natural disasters and terrorism weaken unprepared business infrastructure without effective business continuity policies in place.
Insurers who possess on-premise, legacy systems or data centers will find it more difficult to cope with the day-to-day challenges of this unprecedented pandemic when compared to insurers who opted for a cloud-based, managed services approach. What happens when employees are no longer allowed on premise, or a key employee who helps manage the core legacy insurance system falls ill?
A Shift Towards the Future
Twenty years ago, business continuity was achieved by maintaining dual facilities, such as power supply, communications and networking infrastructures, as well as data centers for the company’s primary sites. These were costly and localized solutions
Today, the internet offers ever-growing capacity and bandwidth, operated by highly resilient and robust equipment. This shift means that insurers no longer need to focus on the physical infrastructure, but rather on the business applications and organizational functions that operate them.
To maintain business continuity, insurers need to identify key functions and core capabilities that are business-critical, for both daily operations, as well as for more volatile situations. They can manage the risks associated with potential crises by:
- Storing critical systems in the cloud. The cloud is physically installed in multiple geographical locations
- Reducing IT geographical exposure by choosing managed services from a global team of experts
A distributed, cloud-based solution used by employees, customers and partners via web browsers or mobile applications (software as a service, or SaaS) is the most resilient option for business-critical processes. Outsourcing and offshoring may sound risky for those who are used to being able to touch their servers on premise. However, the cloud’s technology is now advanced enough to function as an alternative that actually provides more secure solutions that meet all cybersecurity guidelines. The truth is that cloud-hosted solutions are more reliable than any local data center will ever be, especially when such solutions are run and governed by a multi-national team of experts with experience in combining cutting-edge technology with best practice methodologies.
Migration to cloud allows insurance and financial companies to focus on their core business and innovation during the good times, and weather the storms during major challenges, rather than investing in costly infrastructure and then spending hard-earned money on IT and application support. A managed-services approach offers insurers the freedom to respond quickly to changing needs and be less dependent on local services, which is why insurers who chose this option will likely experience better outcomes in coping with coronavirus, as well as future unforeseen challenges.
COVID-19: The European Insurance Industry in Crisis Mode—5 Strategies