The insurance industry is currently engaged in an important discussion about the potential opportunities and risks presented by modern cloud architecture. Insurers have a continuing need to reduce operational costs, increase flexibility and most importantly become better at communicating and integrating with partners and customers.

Cloud computing models have the potential to help in all these dimensions and can potentially have enough impact to fuel disruptive business models. Unfortunately, there is a recent trend toward labeling private clouds as less risky than public clouds and hybrid clouds as a reasonable compromise. This is an example of cloudy thinking—sorry—designed to maintain the current architecture and business status quo and does a disservice to innovative technology and business models. Celent believes that over the next 5-plus years, insurers will naturally move to an “outside-in” architectural model that that aligns well with a hybrid cloud model and, for some classes of carrier, a public-only model.

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