How to identify processes, conduct cloud portability analysis and roll out a cloud adoption plan.

1. I Cloud Services
Are Your
Insurance Processes
Cloud-Compatible?
How to identify processes, conduct cloud portability
analysis and roll out a cloud adoption plan.
By Koduri Suman, Karuppasamy Kumaraguruparan,
Rajamony Arul Aaron and Ramya Balakrishnan
The insurance industry was riding on strong fundamentals, good earnings and sustained performance until
the 2008 economic downturn. With many financial institutions losing their solid footing, insurers did not
escape the financial turmoil. As insurance companies try to regain lost ground, they are challenged by both
external and internal forces to continually reinvent and innovate. Insurers seek technology to help weather
economic storms and build stronger customer relationships. While traditional IT solutions exist, there is
always room for improvement, as companies seek innovative and agile IT solutions with minimal costs and
overhead. Cloud computing solutions have the potential to emerge as a strategic initiative for insurers.
Insurance processes and applications have the potential to be moved to the cloud, and these solutions can
be leveraged by insurers of any size.
Worldwide insurance industry revenue is about 6% of the global GDP,1 totaling trillions of dollars. With the
emergence of technology and the popularity of the securities market, the industry has been experiencing
a paradigm shift in market dynamics and customer expectations. In addition to the current economic
situation, insurers are challenged by external forces, such as demand for better and safer products, intense
competitor pressure in a price-driven market and government regulation/compliance, as well as internal
forces, such as ever-changing organizational structures, company growth (linear or non-linear) and
decreasing levels of human resources.
As insurance products are becoming increasingly commoditized, the pace of technology adoption becomes
the biggest differentiating factor. We strongly believe that cloud computing will be a differentiating factor
for insurers due to this technology’s selling points: Low entry costs, subscription-based pricing, elastic
scalability, reduced operating costs, lower energy costs and a self-service model.
Cloud Offerings
After being in the “Technology Trigger” section of the Gartner 2008 hype cycle, cloud computing is already
in the “Peak of Inflated Expectations” category in 2009, with mainstream adoption expected in the next two
5 INSURANCE INSIGHTS http://cognizant.com

2. years. According to International Data Research, the worldwide market for cloud computing will grow to
$44.2 billion by 2013, from $17 billion in 2009. All the buzz around cloud computing and the investments
made by leading industry players, such as Amazon, Microsoft, Salesforce.com and Google, not only reiterate
the fact that the technology is here to stay, but also that it could take a direction the industry has yet to
witness. In plain terms, cloud computing is a paradigm shift in terms of designing, developing, deploying,
scaling, managing, provisioning and monitoring software solutions.
There are many challenges of cloud computing that
need to be evaluated against the benefits before
adopting the technology, including the maturity of
applications to port into the cloud, cloud deployment
needs, data ownership, data privacy, security,
corporate governance, auditing and vendor lock-in.
One of the challenges for businesses such as insurance to adopt cloud computing is to make informed
decisions on the type of cloud and service they need. Public clouds (like Amazon) are more prevailing in
terms of acceptance and use, but organizations are also looking at private clouds, which are confined to the
organization’s infrastructure, as well as hybrid variants, like virtual clouds. Regardless of cloud type, the
solutions themselves take different dimensions, such as SaaS (software as a service), PaaS (platform as a
service), IaaS (infrastructure as a service), BPaaS (business process as a service), etc.
Cognizant and the Cloud
We have devised a Cloud Adoption Plan (CAP) by utilizing our proprietary Cloud Portability Analysis (CPA)
framework, as well as suggestions on the synergies with emerging technology trends and solutions that drive
the industry today. SOA, BPM, virtualization, grid computing and high-performance computing are just a few
of the technologies that must be planned in parallel with cloud computing. The CPA framework helps insurance
companies assess the maturity of applications and processes to derive the Cloud Portability Index. Insurer
preferences, along with index values of applications, help insurers plan their transition into the cloud. CAP
recommends various alternatives for the transition of the selected processes and applications into the cloud.
SOA, BPM, virtualization, grid computing and
high-performance computing are just a few of
the technologies that must be planned in parallel
with cloud computing.
We have positioned ourselves as a cloud service provider, with our “Cognizant Cloud” initiative to embrace
the emerging technology. The service offerings on this cloud include business process and software
solutions envisioned from our vertical offerings. Given our deep domain knowledge in the insurance space,
serving top insurers across the globe, we are well-positioned to provide innovative cloud solutions that
will redefine the way customers provide insurance solutions today.
Our service offering in the cloud computing space addresses the following three broad service lines:
I Strategy & Consulting (Plan)
I Develop & Deploy (Build)
I Maintain & Operate (Run)
http://cognizant.com INSURANCE INSIGHTS 6

3. Cognizant Cloud Offerings
I Cloud assessment & evaluation
Plan I
I
Cloud enablement service
Setting up private and hybrid clouds
I SaaS enablement
I Single to multi-tenant deployment accelerator
Build I
I
Cloud cache framework
Private cloud solution
I High performance batch solution
I Usage metering framework
Cloud backup and restore solution
Run I
I Cloud test bed solution
I SaaS enalbement solutions
Figure 1
Our Cloud Center of Excellence (CoE) addresses the cloud computing needs of clients and partners. The CoE
works with multiple teams across industries to develop solution accelerators and frameworks to migrate existing
applications to the cloud. It also has solutions that can convert an existing customer infrastructure into a private
cloud to maximize returns from customer investments. We have developed test beds for the cloud, with
scenarios that will ensure verification of quality of service and service level agreements. We also assist
customers in assessing their cloud needs and providing a strategic roadmap in terms of selecting the right
approach and cloud deployment strategy.
Insurance Cloud
In the near future, we potentially see the low-cost entry of cloud as appropriate for small and medium-size
businesses (SMB). In terms of business processes, “creating a new quote,” “quick quote,” “submitting a
claim – FNOL” and “lead management” are near-term candidates, given the nature of their business
functionality and related services that need to be made available to those processes. For a large insurance
company, the core systems such as “policy management,” “underwriting,” “claims,” “billing,” and “agency
management” can be migrated to the cloud model. There are many immediate opportunities for building
cloud-based solutions that will benefit the insurance industry.
We have developed test beds for the cloud,
with scenarios that will ensure verification of
quality of service and service level agreements.
Cloud solutions can work for insurers of any size. SMB insurers can operate on proven applications,
providing them with low-cost entry into the market. These insurers can introduce cost optimization by
hosting their services on the cloud. Larger firms that have invested heavily in multiple, complex and outdated
systems can leverage cloud computing to streamline their systems. Private enterprise clouds and hybrid
clouds show promise to large insurers, as they have complex systems and workflows, and they are very
concerned about how quickly a cloud service provider can respond to an outage. Large insurers like to have
more control over their operational procedures, and this naturally leads to more promise on private
enterprise clouds and hybrid clouds.
7 INSURANCE INSIGHTS http://cognizant.com

4. Complex workflows can be modeled as cost-effective BPaaS solutions on the cloud, potentially replacing
the business process management (BPM) solutions in today’s environment. Policy administration systems,
which typically have a set of complex workflows, are good candidates to be developed as a cloud-based
solution. Service providers can offer the BPaaS solution following an ITIL-based process. Some of the
potential systems that can be built leveraging cloud computing technologies are:
I Campaign management: Developing, launching and managing targeted marketing campaigns.
I Agency management: Agent registration, licensing, lifecycle administration, ability to submit
and write business, dividend and commission payment.
I New business processing: Collection and registration of information related to new policies
that are issued. Interfaces with core insurance systems like underwriting, rating and policy
administration.
I Rating: Calculation of premiums, using policy data entered by the customer. Operates
independently and uses a rate computation engine to calculate the premium.
Cloud computing should not be seen as being
limited to light-weight applications like data
capture, CRM or sales force automation.
Similar to insurance systems, some of the key insurance business processes can also be built on the cloud.
These solutions can functionally match traditional industry solutions, while providing more flexibility and
scalability. Some of the potential insurance business processes that can be built leveraging cloud are:
I Acquire customer: A process by which new business is gained by proposing adequate
products to meet customers’ needs and requirements.
I Acquire agent or provider: A process by which an agent or provider registers with the insurer.
I Administer claims: A process to handle claims, from anticipation, to recording, opening and
closing.
I Provide quote: A process that provides a real-time quotation for an insurance policy on data
provided by the customer.
I Inquire billing information: A process that enables querying of the policy data store and
providing the information to the user.
All these components or systems are fairly independent and deal with a specific function in the insurance
value chain. As an independent module, these systems can be built on a SaaS or BPaaS model.
Cloud Portability Analysis Framework
Our Cloud Portability Analysis framework measures the portability index of applications based on specific
parameters. The parameters have been chosen considering the business processes and criticality of the
insurance industry and also to gauge both quantitative and qualitative values of an application. Figure 2
illustrates the Cloud Portability Index score using the framework for a large insurer with moderate IT adoption
(see next page).
Cloud Adoption Plan
Our Cloud Adoption Plan provides a roadmap to insurers for a smooth transition onto the three types of cloud,
namely, private, virtual and public. Figure 3 shows a three-phased cloud adoption plan to move applications
onto the cloud (see next page). Insurers can transition applications from private to virtual to public as the risk
http://cognizant.com INSURANCE INSIGHTS 8

5. Cloud Portability Index (Illustrative)
Social Networking
Agency Management
Acquire Customer
Statements
Customer Relationship Management
Document Processing
Rating
Reserves Management
Investments
Cloud Portability Index (CPI) Score: 0 1 2 3 4 5
CPI below 2.5: No portability CPI between 2.5 and 4: CPI above 4:
Private or Virtual Public cloud
Figure 2
Phased Migration - Cloud Adoption Plan
Private Cloud
Phase 1 I Move most applications onto a private cloud
I Involves identifying reusable services, centralizing
infrastructure and modernization of the legacy systems
I Vendor participation helps smooth transition to cloud
Virtual Cloud
Phase 2 I Applications on private cloud could be transitioned to virtual cloud
over a period of time
I Strict SLAs, security and regulations for hosting the virtual cloud
I To mitigate risk, multiple vendors could be utilized
Go Public
Phase 3 I Huge transition and needs careful evaluation
I Most favored by small insurers: Ease of entry and no
overhead in setting up infrastructure and applications.
I Public cloud is highly scalable and agile, with huge bandwidth
Figure 3
9 INSURANCE INSIGHTS http://cognizant.com

6. Cloud Adoption Plan after Cloud Portability Analysis
Phase 1 Phase 2 Phase 3
Type / Service Private Virtual Public
@ Insurer @ Dedicated Vendor @ Global Provider
I Underwriting/Rating I Claims Processing I Marketing
I Litigation Management I Agency Management I Social Networking
IaaS I Investments I Policy Processing I Advertising
PaaS I System of Records I Billing I New Agency Setup
I Business Support
I Reserves Management I Rating/Quoting I CRM
I Investments I Policy Issue/Processing I Agency Marketing
I Commissions I Claims Processing I Social Networking
SaaS I Business Critical Data I Agency Management I Advertising
I Billing I Comparative Raters
I Licensing & Appointments
I Acquire Customer I Production Management I Customer Service
I Acquire Agent I Ticketing Systems I Claims Support
I Financial Services I Imaging/Scanning Services
I Bill Collection/Payments I Third Party Data
BPaaS I Documents Processing I Statements
I Administer Claim I Print Delivery
I Provide Quote
IaaS: Infrastructure as a Service SaaS: Software as a Service
PaaS: Platform as a Service BPaaS: Business Process as a Service
Figure 4
gets mitigated at each level and insurers realize the benefits of the cloud. Also in the cloud, insurers can
choose the type of service based on the levels of sharing of infrastructure, platform, software and business
process as a service.
The Cloud Portability Analysis and Cloud Adoption Plan, combined with the prerequisites of the insurer,
cumulatively help the insurer plan a roadmap to embrace cloud technology. Figure 4 illustrates how insurance
services fit into the cloud stack. It applies to a large insurer with moderate IT adoption.
Conclusion
Our Cloud Portability Analysis framework and Cloud Adoption Plan are the right tools for insurers to access
the maturity of applications and embrace the cloud. Cloud computing is destined to become part of almost
every organization’s IT strategy. Innovative insurers can either develop solutions on the cloud or utilize
services available from solution providers that can position them to be a market leader. By leveraging cloud
computing in conjunction with a knowledgeable cloud computing consulting partner, insurers can benefit
from the cloud.
Footnotes
1 Plunkett Research Ltd.,
http://www.plunkettresearch.com/Industries/Insurance/InsuranceTrends/tabid/239/Default.aspx
http://cognizant.com INSURANCE INSIGHTS 10

7. References
I Judith Myerson, “Cloud Computing vs. Grid Computing,” IBM Web site, March 2009,
http://www.ibm.com/developerworks/web/library/wa-cloudgrid/
I Christian Vecchiola, Suraj Pandey and Rajkumar Buyya, “High-Performance Cloud Computing: A View
of Scientific Applications,” http://www.buyya.com/papers/HPCC-ISPAN2009-Keynote.pdf
I Mark Teter, “Six Myths About Cloud Computing,” Advanced Systems Group, June 2010,
http://blog.virtual.com/2010/6-myths-of-cloud-computing-number-4-and-5
I “Cloudy with a Chance of Profits,” Insurance & Technology, June 2010.
I Andy Scurto, “The Power of Cloud,” Insurance Networking News, December 2008,
http://www.insurancenetworking.com/issues/2008_56/insurance_technology_cloud_computing_ser
vers_mainframes11525-1.html
I “The Insurance Industry Enters the Cloud Era,” Microsoft Web site, May 2009,
http://www.microsoft.com/presspass/features/2009/May09/05-18ACORD2009.mspx
Koduri Suman is a Consultant within Cognizant Business Consulting and has expertise in the life insurance
and annuities domains, focused on policy administration systems, requirements engineering and IT
transformation. He holds certifications from LOMA and AAPA in addition to a master’s degree in
management. Koduri can be reached at Suman.Koduri@cognizant.com.
Karuppasamy Kumaraguruparan is a Senior Architect within Cognizant’s Insurance Practice. He is a TOGAF
Certified Practitioner and has expertise in cloud computing, SOA, Web 2.0, mobility and open source
platforms. Karuppasamy can be reached at Karuppasamy.Kumaraguruparan@cognizant.com.
Arul Aaron Rajamony is a Manager with Cognizant’s Insurance Practice, with expertise in new business
models, underwriting and pricing, cloud computing, application modernization and COTS product
implementation. He can be reached at ArulAaron.Rajamony@cognizant.com.
Ramya Balakrishnan is an Associate Consultant within Cognizant Business Consulting and has expertise in
the property and casualty insurance domain. Her background is in specialty lines, underwriting and billing.
She holds a master’s degree in management and has a CPCU certification. Ramya can be reached at
Ramya.Balakrishnan2@cognizant.com.
11 INSURANCE INSIGHTS http://cognizant.com