Property & casualty insurers face ever-changing challenges and opportunities in a future defined by innovation and speed. For the successful carrier of tomorrow, the question of cloud delivery is no longer if, but when – and more importantly, how – to transition from legacy systems to a modern delivery model.
While “the cloud” has become a common term in any modern company’s vocabulary, there are actually three primary differentiated models of cloud delivery available today. IaaS, PaaS, and SaaS each have their own sets of advantages, and understanding these differences is essential when selecting the right system for your company.
What is it?
Infrastructure as a service (IaaS) simply lets carriers outsource physical infrastructure, network security, and virtualization. It is the simplest of the cloud hosting models available today. Think of it like an on-premises install at a different location — the IT model you are probably accustomed to without the hosting pains. IaaS has the added benefit of a few critical responsibilities being taken over by the hosting vendor, but more is left to the responsibility of the insurer.
What are the pros?
First and foremost, moving from an on-premises install to a cloud-based model is an upgrade for any insurer. With IaaS, you gain the data security and cost-efficiency benefits of cloud hosting. Additionally, an IaaS model allows for more scalability than traditional physical hosting, so your applications can grow in concert with your operation.
What are the cons?
While IaaS does mean moving to the cloud, it is the least comprehensive of these three solutions. When comparing IaaS vs. PaaS vs. SaaS, IaaS leaves insurers responsible for most of the IT work. IaaS requires carriers’ that IT teams manage most of the company’s processes and systems. The insurer is also responsible for continuing much of the day-to-day work that makes on-premises solutions slow and costly.
What is it?
PaaS stands for Platform as a Service and equates to a middle-of-the-road outsourced cloud hosting environment. With PaaS, insurers outsource physical infrastructure, network security, virtualization, virtualization management, and infrastructure software maintenance.
A PaaS delivery model can work for carriers that are looking to focus more of their internal teams on insurance processes rather than IT infrastructure maintenance. Whether that means allocating more manpower to build new products or focusing on a stronger marketing plan to win new customers, PaaS can give you more flexibility to approach those goals. It is also more cost-effective than IaaS, and can keep carriers up to date on critical security updates.
While PaaS does lighten the load in terms of in-house IT responsibilities, the two most labor-intensive and time-consuming aspects of maintaining your own systems remain the responsibility of the carrier’s organization. Updating software when necessary or advantageous as well as triage of any potential issues will be left to the insurer, and both of those can be labor-intensive and costly.
What is it?
When comparing IaaS, PaaS, and SaaS, SaaS quickly emerges as the most comprehensive cloud delivery model available, as a true SaaS provider will manage every aspect of an insurer’s core systems save for the carrier’s insurance products themselves. Software as a Service is the least resource-intensive cloud delivery solution for P&C insurers. With SaaS, server maintenance, platform management, system updates, and issue triage are handled directly by the vendor — fully outsourcing the most challenging aspects of maintaining core systems.
It’s all upside with a SaaS solution — the stress and hours of work required to run core systems are officially “outsourced,” freeing carriers up to focus on all other aspects of the business. It saves insurers the most time, the most money, and the most effort. With a comprehensive SaaS platform, creating new products and user experiences — and getting them to market faster than your competitors — is easier than ever because the majority of the associated IT responsibilities are in the hands of a software provider.
The advantages of SaaS are amplified as your own organization’s internal resources shift further away from systems administration and triage toward finding new ways to win and retain customers.
Despite ample documentation of the security available in top-tier cloud hosting environments, some people may still be wary of migrating essential operations to a cloud-based system. A key to overcoming this objection when moving to a SaaS platform will be educating internal stakeholders on the value and security of modern SaaS solutions. When searching for the right vendor, it is imperative that you do proper research, ask the right questions, and find the right solution for your organization’s unique needs.
IaaS vs. PaaS vs. SaaS is not so much a debate about which model is superior, but rather an imperative to understand what your business will be directly responsible for in each scenario. Successful carriers, now and in the future, need comprehensive, scalable, and adaptable cloud systems, allowing them to focus their resources on the things that matter most – their products and customers. By assessing your needs and matching your desired business outcomes to each of these potential models, a clear path forward will emerge.