Cloud, On-Premise or Hybrid?

Selecting the right deployment model for insurance management software is crucial for optimizing operations, ensuring data security and maintaining resilience. 

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As an insurer, if you’re looking to simplify your core processes and make them digital-ready, insurance management software can help, but, you’ll have to make several key choices, from the many features and functionalities to the implementation plan to training, onboarding and customer support experience and more. 

One of the most-often-overlooked aspects of the software is its deployment format. Selecting the right deployment model is crucial for optimizing operations, ensuring data security and maintaining resilience. In this blog, we talk about cloud, on-premise and hybrid deployment models, along with their pros and cons, to help insurers make a well-rounded decision.

See also: Moving From Legacy Systems to the Cloud

Cloud-Based Insurance Management Software

As the name suggests, cloud-based insurance management software stores, manages and distributes software applications, computing resources and databases over the cloud. Such a deployment model makes the insurance management software accessible to all authorized stakeholders regardless of their physical location. 

Benefits include:

  • Cloud-based insurance management solutions are highly scalable and allow businesses to adjust resources, processing power, and other parameters as business needs change.
  • Because the cloud-based insurance software company offering this service is responsible for end-to-end platform management, you don’t have to dedicate resources to maintenance, security updates, etc.
  • They follow a pay-as-you-use model that can make them more affordable.
  • They boast a solid infrastructure paired with disaster recovery capabilities that infuse reliability into insurance processes and workflows.

In contrast, cloud-based insurance industry software struggles with the following limitations:

  • Not having control or ownership of the data and infrastructure can make insurers hesitant to try out cloud solutions due to data security concerns.
  • Cloud-based solutions rely on a stable internet connection to operate. Any disruptions on this front can suspend or break down insurance processes.
  • With insurance deeply ingrained in legacy systems, transferring all the data onto the cloud without losing any of it can be a challenge.
  • Relying on a third-party cloud hosting service provider could result in the insurance business getting exposed to technical issues and downtime.

On-Premise Insurance Management Software

On-premise software is a deployment mode wherein the server, software applications and hardware infrastructure, are hosted locally within the organization. On a large scale, server closets, server rooms and server warehouses may be rented out. The software is installed on a single computing device, and the data is stored in a physical location. 

Some of its key advantages include:

  • Absolute data control and security, as the insurance company is solely in charge of the data and exercises granular control over it.
  • Ownership of data also allows them to adhere to stringent industry regulations more effectively and maintain compliance.
  • Because all the software and data are hosted internally, there are fewer chances of disruptions or downtime attributable to external factors.
  • Although there is a significant upfront cost, the best insurance software solution on-premise will have predictable and controlled expenses.

Limitations of on-premise insurance management systems include:

  • Setting up the insurance software system can be expensive.
  • Maintaining the insurance management software will add to the costs and resource-intensiveness.
  • On-premise systems lack the scalability to adapt to changing workloads and business requirements.
  • They restrict accessibility, as insurers cannot use on-premise solutions for remote teams.

See also: Why Cloud Platforms Are Critical

Hybrid Insurance Management Software

Hybrid insurance management systems combine the elements of on-premise and cloud-based solutions. Such a blend offers flexibility and customization, mixed with security and control. In such a setup, critical or sensitive data may be stored on-premise to ensure control and compliance. Business processes can be deployed on the cloud for greater scalability and accessibility.

This combination offers the following advantages:

  • Hybrid insurance software systems are flexible, as insurance technology service providers allow you to choose what parts to store on-premise and what to deploy on the cloud.
  • They are efficient in terms of costs. 
  • They encapsulate robust disaster recovery strategies to ensure business continuity and reliability, even in the face of disruptions.
  • You can customize a hybrid insurance software system to match the unique requirements of your insurance business.

Despite the many advantages, hybrid systems also possess the following limitations:

  • Managing and adopting such an infrastructure can be complex, as it requires careful planning and implementation while maintaining consistency.
  • Ideally, hybrid models are cost-efficient. However, it is easy to get wrapped up in different features, options and complexities that give rise to cost creep.
  • Integrating hybrid insurance management systems can pose challenges while introducing friction or bottlenecks within processes.
  • Managing a hybrid environment requires a diverse set of skills, as the IT team would have to be proficient in on-premise and cloud technologies.


There is no black-and-white answer to what’s better -- cloud vs on-premise vs hybrid. The choice eventually boils down to the insurance business’ specific needs, priorities, resources and capabilities. Moreover, the choice may also be dynamic, as what you choose may change with the evolution of the business objective, regulatory norms and long-term business sustainability. As such, insurers also need to know how to overcome common challenges when implementing insurance software.

Faheem Shakeel

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Faheem Shakeel

Faheem Shakeel serves as the practice head (insurance technology and services) at Damco Solutions.


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