Evolution versus revolution
The insurance industry's systems of record are mission-critical business applications. They manage people's retirement investments, life savings and personal health data, making the consequences of a snafu far greater than that of popular consumer-focused cloud applications like Facebook™ and Netflix™. In contrast to insurance policy administration systems (PAS), these ubiquitous social media and entertainment platforms are "cloud-native." There were no historical databases to migrate or features to bring forward. Yet insurers are compelled to consider the cloud, partly because these cloud-native platforms have raised consumer expectations and partly because of the cloud's agility and lower operating costs. However, for life insurers with decades of valuable data and functionality that can't be discarded, a move to the cloud presents a complex issue to contemplate. That's why some insurers are taking a "cloud-enabled" approach, which eases the transition.
Cloud enabled versus cloud native
A cloud-native approach starts from ground zero, building capability feature by feature and function by function—which means life and annuity carriers sacrifice functionality that's long been a staple of the PAS. Adding new features and functions is heavily dependent on resource capabilities and capacity. For carriers that maintain complex insurance products across multiple lines of business and multiple policy administration systems, a cloud-native approach is not optimal because it reduces flexibility. True cloud native is distributed with data protection issues, unless controlled by region, and removes cloud-agnostic capability as an offering. Insurers committed to a specific software vendor in terms of coding and database may unnecessarily lock themselves to a specific cloud vendor.
In contrast, Accenture has taken a "cloud-enabled" strategy that allows life and annuity carriers to gradually adapt to a cloud-native capability, providing immediate gains in scale and efficiency without sacrificing functionality or independence. Carriers can leverage all the required business features and functionality they've come to expect from a modern new business and underwriting or policy administration system, including their unique product and process characteristics that differentiate them in the market. As a result, carriers embark on a faster, smoother journey to cloud.