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August 22, 2011

Insurance Companies Negotiate New Risks

Nicole Hemsoth

Cloud computing in any form, whether its delivery of infrastructure as a service or software delivered via a web interface, still faces slower adoption in risk-averse and highly security-conscious industries, according to Anthony O’Donnell, an insurance technology expert who examined the bevy of insurer concerns about clouds in an a recent article.

According to O’Donnell, “While insurance CIOs are warming to a variety of cloud, SaaS and PaaS offerings, concerns about the privacy and security of sensitive customer data have made insurers cautious about when and where they adopt them.”

O’Donnell claims that a number of insurance companies have decided to take the perceived “risk” of possible data breeches using any number of cloud-based services, but that the adoption rate for this sector is not as high as in others. This is in part due to the sensitive nature of insurance data as well as due to issues that include performance and availability.

As Rick Roy, CIO for CUNA Mutual Group told Network World, the availability and security issues hand-in-hand present too many possibilities for problems for some insurance CIOs to be comfortable with.

As Roy stated, “Security for non-public, private information remains a huge concern for insurers, as it is a business issue that spans beyond just a technology issue…And outages like the recent Amazon Web Services incident have also renewed industry concerns around availability and performance of cloud.”

O’Donnell, backed by a series of insurance IT pros who weighed in on the issue, claims that while insurance companies are fine with using cloud-based services to handle many of their customer relations tasks, the mission critical applications that require high availability and inside-the-firewall security are staying put for some.

Full story at Insurance and Technology