For the last ten years the insurance industry has been a classic case of the tail wagging the dog. For years the industry has been beholden to the price comparison sites like Compare the Market and Go Compare, who have largely driven the sector and stifled innovation. New functionality and products were few and far between as the industry fought to get the top slots on the comparison sites by shaving premiums to the bone and offering bigger and better commissions. What this has led to is an industry that’s complacent and slow moving. The infrastructure they have was never designed to deliver quotes to the internet, it’s unreliable and it can’t scale to match the market needs. They have little understanding of how to deliver reliable and scalable websites and their backend databases were never intended to deliver data in real-time. Unfortunately for the incumbent insurance industry, there are new disruptive challenger businesses arriving and they’re both agile and innovative and can react quickly. They have IT that can reliably and consistently deliver quotes to the price comparison sites seconds faster than the incumbents, build reliable all singing and dancing mobile-optimised websites fast and automate all of the time-consuming and expensive systems like claims management, policy changes, renewals and document delivery that cost the incumbents millions to handle. They also don’t have the legacy of IT equipment that was in some cases commissioned in the 1960s. What they do have is access to the most up-to-date servers and storage with lightning-fast networks and connectivity served from a network of data centres that can scale up or down and are paid for on an Opex basis. The problem for the incumbent industry is that the cost of delivering the new initiatives they so desperately need to compete with challengers is high and could take years to deliver. Part of the reason is the way the insurance sector has dealt with their IT needs over the last 15 plus years. Back in 2000 the IT department wasn’t central to the business profits and increasingly it was seen as a tax on the business, then along came virtualisation, out went the IT department and in came the outsourcers. The outsourcers effectively took away the need for the business to invest in hardware, software, IT staff and virtualisation meaning the hundreds of servers and the staff to tend them could be replaced with just a few people and a few servers. Fast forward ten years and those outsourcers are a bottleneck to the business and an expensive problem. They’re employed on multi-year contracts, so there’s no flexibility on costs. The solutions are ten years old and haven’t changed, new projects need to be negotiated for months in advance and perhaps most importantly, they now have internal IT teams that are more curators than innovators. So how do you get out of this problem? The answer for the insurance world is to look at the challenger businesses and bring IT to the centre of the business and innovate. The new kids on the block are driven and shaped by C-suite teams who are driven and guided by technology. For them technology is an enabler, not a cost, it creates new opportunities, shapes the business and it’s driven by data. One of the advantages that older insurance businesses have is access to huge amounts of legacy data that can help them get an advantage over their new upstart competitors. However, for most the data is sitting mouldering away in archives or in SQL databases that don’t easily deliver business insight. To get the most out of this data they require business analytics, big data and up until recently this required data centres, server farms and a large spend on internal storage. This is where public cloud solutions come in; Move the data to the public cloud, spin up a big data application, get your results and then spin it all down. You pay for what you need and you get maximum use of the data. If you need to analyse the data for longer – and you will once you start to see the benefits it can drive - then look at co-location and a private cloud where you can ensure the data remains secure while still maintaining the benefits of the cloud. The future of the insurance business is more technology, not less. However unlike the solutions of the past you need to choose partners who can change their infrastructure to suit your needs, who can scale up and down quickly and who understand the meaning of the data and the need for high-availability and speed of connectivity. You also need a partner who can deal with the compliance issues such as the new PRA Solvency II legislation that came into force in Jan 2016. The legislation requires businesses to measure the operational risk of their IT deployment with their own risk self-assessment (ORSA) and depending on the risk, requires the business to set aside much-needed capital to cover the operational risks. To reduce the time and cost in ensuring the business is compliant you need a partner who can deliver not only this compliance out-of-the-box, but who also keeps ahead of the standards in the insurance and the general cloud world, including Solvency II, PCI DSS, ISO 27000, etc. Lastly, you will also need a partner organisation that can handle the tsunami of data that will soon be arriving from the internet of things (IoT). The current car mounted black box monitoring devices are just the tip of the iceberg and where they typically produce tens of megabytes of data per month, the future devices will develop gigabytes of data per month giving you a petabyte headache, but more of that another time.