Insurance, as you’ve noticed, isn’t what it used to be. There was a time when it involved an intimidating guy in a suit, lots of paper, and a filing cabinet that groaned under the weight of every policy issued since the dawn of time. No more. Now everything is in the cloud — a phrase that in this industry means equal parts excitement and existential dread. Cloud-based Policy Administration Systems (PAS) are sold as the silver bullet, the magic pill that will make everything more efficient, more secure and (most importantly) cheaper. And yet, as with all things that claim to change the world, we shouldn’t take that promise at face value.
So what exactly do you gain and lose when you trade your on-premises infrastructure for a cloud-based PAS? Let’s take a walk through the benefits first before we get to the headaches.
Why Insurers Are Salivating at the Cloud
It’s always about cost. Maintaining on-premises servers is an expensive hobby — one that involves not just the upfront cost of the hardware but also the ongoing costs of IT staff, security updates and emergency maintenance when something goes wrong. Cloud-based systems remove that worry. They offer scalability so you only pay for what you use and not for a big digital storage unit you may or may not need.
Then there’s the matter of accessibility. A cloud-based PAS allows insurers to handle policies, claims and underwriting from anywhere. No longer do you have to have a team of overworked underwriters chained to their desks waiting for a server to come back to life after a crash. Instead, everything can be accessed remotely — so when disaster strikes you don’t have to scramble for backup files stored in a dusty drawer. This extends beyond location too. A good cloud-based PAS integrates with other software so you can manage insurance claims and policy software without jumping through technical hoops.
Security, of course, is a major selling point. You may not immediately associate cloud computing with digital fortresses, but many cloud providers have robust security measures that individual insurers would struggle to replicate in-house. Continuous updates, real-time threat monitoring and encrypted storage mean a well-managed cloud system is often more secure than an aging on-premises database vulnerable to cyber threats and accidental deletions.
The Cloud Enthusiasts Don’t Want to Talk About
Before you get carried away with the poetry of progress, there are a few things to consider that the cloud sales pitch doesn’t mention. There’s always something left out of a pitch, after all. You don’t highlight the weak points in the suit of armour that you’re trying to flog.
First, there’s the little matter of compliance. Insurance is an industry wrapped in regulations, bound with red tape. Data has to be stored securely but also in accordance with national and international laws, some of which require sensitive information to be stored within certain geographic boundaries. While cloud providers will tell you their storage practices meet these requirements, it’s an extra layer of complexity to navigate.
Then, there’s control. On-premises systems may be flawed, but at least you have ownership. If something breaks, your IT team can fix it immediately. If security needs tightening, you can implement internal measures. But with a cloud-based PAS, you have to trust an external provider to do it for you. That means giving up some level of control over uptime, maintenance schedules and even software updates that might change your workflow.
Cost is a double-edged sword. Cloud systems are often cheaper up front but the long term costs creep up as you scale. Monthly subscription fees, data transfer charges and extra costs for advanced security features can add up and sometimes make cloud-based PAS more expensive than you thought. That isn’t to say it’s not worth the expense, though.
And then there’s downtime. While cloud providers promise high availability, no system is immune to outages. A server failure at a cloud data centre can bring your business to a standstill and if that happens at the wrong time – say during processing thousands of claims after a natural disaster – the consequences can be severe.
Is the Cloud the Future or Just the Next Step?
None of this is suggesting cloud-based PAS is a mistake, just that it’s not the silver bullet. Just like the move from paper to digital, the move to the cloud is an evolution not a revolution. It makes sense for many insurance companies, especially those looking to modernise without breaking the bank. But for others – those in highly regulated markets or with specific security requirements — the benefits of keeping it in-house might still outweigh the benefits of offsite storage.
So maybe the real question is not should insurers go cloud based PAS but how do they do it? A hybrid approach – where some data and services stay on-premises and some go to the cloud – might be the best of both worlds. You can keep control of your most sensitive data and still get the flexibility and scalability of the cloud.
In the end, it’s not about the technology. It’s about strategy, risk vs reward and ensuring the promise of innovation doesn’t become a liability. The cloud for all its good points isn’t a magic wand. It’s a tool – one that can streamline and improve if used wisely but create as many problems as it solves if approached recklessly.
Cloud Adoption
If you’re an insurer considering the move, the most important step is due diligence. Choose a provider with a good track record, make sure compliance is met and plan for disruptions and you’ll mitigate the risks of moving to a cloud based PAS.
Ultimately the success of any new system depends not just on the technology but on how it’s implemented. Rushing into the cloud without a strategy is a recipe for disaster. But with planning, realistic expectations and a healthy dose of scepticism cloud based PAS can be a valuable tool in modernising the insurance industry.
Because if there’s one thing insurers should know better than anyone, it’s risk.
