Tag Archives: microsoft

The Case for Cloud Computing

Insurers must regain competitive ground in the digital race for the customer, and all roads that make sense … lead to cloud adoption.

Growing ransomware attacks should be the weight that tips the scales. T-Mobile was breached just recently. Half of its customers (105 million) now have their Social Security numbers, names and birthdates exposed. The information is already up for sale. Last year, insurers and healthcare systems were hacked in greater numbers. Ransomware victims across all industries paid out $370 million in cryptocurrency in 2020, 336% more than in 2019.

Vigilance in cybersecurity requires a different approach

Cybersecurity is not optional. It is table stakes. The issue is no longer all about keeping the data and systems safe. It is about looking out for and being able to nip potential vulnerabilities and hackers in the bud, before the hack actually happens. Vigilance is not reactive, it is proactive.

Pre-cloud security matched pre-cloud threats.

It used to be that the typical trajectory of a security exercise within a company would be periodic business continuity and disaster recovery checks. You might also have audits that are mandated by a public service organization or you might have specific customers that request to be in conformance with SOC audits, etc.

That type of security practice has spun 180 degrees. What changed?

Anyone can hack now.

The increasing consumerization and democratization of data and technology tools has made nearly every citizen in the world a potential hacker. Any interested party with a high IQ is potentially someone who can hack into your systems. The new urgency and vigilance is no longer about conforming to audits, conducting periodic checks or conforming to state or public-sector-driven regulations. It’s about continually being secure by examining your own insecurity. Cybersecurity is an enabler to doing business.

See also: Why Cloud Platforms Are Critical

The frequency of hack-possible events is making security far more complex.

Insurers and vendors all have security measures in place. But cyber hackers are twice as fast at breaking solutions as the solution providers are at updating their security tools. This makes cybersecurity a process rather than an event-driven initiative. Hackers have also improved in their ability to handle complexity. Where hacks come from and who can be a perpetrator is always expanding. Corporate security teams are doing their best, yet they are still sometimes scratching their heads, asking themselves, “Just which part of our data and systems do we protect?” And the answer, of course is, “all” and “everything.” Nothing is truly safe. Cybersecurity is no longer a point-in-time exercise, and it has to cover every part of your data and platform framework. 

Answer = Cloud

Public cloud vendors answer these two related problems: expansion of the hacker community and the increasing complexity of protecting against hacking events. With public clouds, the large cloud vendor is doing the job of security for all of us — proactively taking responsibility for their customers.

Microsoft Azure is a great example. Microsoft invests more than $1 billion annually in cybersecurity research and development for Azure alone. This doesn’t include Microsoft Office or any of their own products. Microsoft Azure has more than 3,500 dedicated security experts. Their job, day in and day out, is to counsel their customers and close gaps. “Here is how well-designed your technology stack is against cybersecurity, and this is what Azure can do for you.”

With the cloud, security is job zero

If an insurer gets one takeaway from this blog, it should be this: Cybersecurity is job zero. It is not an add-on.

When we talk about securing a customer’s stack, there are six key things that we should do for them. These principles are universally adhered to:

  1. We implement a strong security foundation. We must begin with role access. No matter who you are, your role is given only a certain sphere of access, and that is all you can access. As a cloud software vendor, we ensure that level of identity foundation.
  2. Insuring traceability. A traditional issue in security was that, until three or four years ago, when hacks happened, it could take months for companies to figure out the root cause. What was hacked? What was the precise level of leakage, especially in insurance companies? The delay in understanding could lead to billions of dollars in loss. Insuring traceability, which includes monitoring alerts and audit action and changes to your environment, happens in the cloud in real time. You don’t need to wait two months for some IT guy to get into the old logs and figure out what has been lost or hacked. Your systems have real-time traceability.
  3. Security must be applied on all layers. When you consider an organizational stack that resides in the cloud, that includes a client’s network, their servers, their websites, their applications and databases. Everything is now in the cloud. When we say that we manage their security, we apply security at all of these layers as well. We aren’t just securing their database or their front end.
  4. Data must be protected both in transit and at rest. This is a modern, cloud-driven cybersecurity attribute. If you think of a traditional insurance organization, volumes of data are stored in their archival systems, such as their legacy administration and billing systems. This is data at rest. But an incredible amount of data is in constant transfer between the insurer and brokers or the insurer and customers. That is data in transit. What a cloud-native environment does is to protect data both in transit and at rest.
  5. Least access as privilege. This is a logistics issue related to role-based access. Another traditional problem within internal IT shops has been that there is not always transparency if an employee leaves or is fired. HR may take 24 hours before notifying IT.  IT takes two hours to deactivate that person’s access from the respective systems. By this time, security has already been compromised. All cloud systems function on a different principle — the principle of least access privilege. A person only has access to the portion of the system that they are supposed to touch. There is no universal access. The CFO doesn’t automatically get access to everything. Cloud security functions on the basis of least access privilege. If a person needs greater access, they have to ask for it and gain permission before it is granted. This is paradigm shift in security that the cloud has brought about.
  6. Security guidance through the well-architected playbook. Let’s say that your organization moves to the cloud to improve their digital presence and manage their data more effectively and to save additional expense. What you’re getting is so much more than that, though. Integrated security is the “value-add.” You’re receiving protective security and security expertise. This is life in the cloud. When you sign up, you get measured for how secure your full system is. The playbook has security design principles that will allow you to measure your system security. “Here’s how well-designed your systems are, based on key design principles. Here are some gaps that you need to fix.” The playbook also provides things like incidence response simulations. It has investigation policies and processes available as templates. It is a ready-to-use “security cookbook” supported by subject-matter experts. It is less prescriptive and more actionable. “Here’s where you are. Here is what needs to happen for you to get where you need to be.”

And if that’s not enough…there’s the financial picture

Cybersecurity costs money. If you are investing in internal security, you will likely spend more than if you are letting your environment be managed as a cloud-native environment where security is a part of the solution. The cloud hands you cost avoidance as a part of your business case or return on investment. The cloud provider is taking on this responsibility. This is intentional cost-avoidance on the part of the insurer.

In data-intensive organizations, such as financial, healthcare or insurance organizations, there is a significant amount of leakage every year due to security breaches. These aren’t necessarily data thefts; they are losses that are just eliminated by the cloud. The razor-sharp, stringent data security mechanisms that are in place for cybersecurity naturally fix other data leakage issues. This is an unintentional cost-avoidance, but it happens nonetheless.

Which brings us to our last point. The same real-time monitoring that can be used for security purposes will even help insurers to adopt better real-time monitoring for any issue. If you extend the concept, moving to the cloud forces the organization to whip its data and processes into shape enough to migrate, then the cloud takes over. The simple process of preparation is a beneficial exercise. Every aspect of cloud migration makes an excellent case for doing it now.

See also: A Novel Approach to Cybersecurity

For a broader look at many of the key benefits of cloud adoption, be sure to view the Majesco and Microsoft webinar, New Normal: The Catalyst for Cloud Adoption, or read Denise Garth’s interview/blog with Manish Shah, President and Chief Product Officer, Majesco, and Jonathan Silverman, Director of Insurance Industry Solutions, Microsoft, titled Majesco CloudInsurer Plus Microsoft Azure: A True Insurance SaaS Platform.

Six Things Newsletter | April 13, 2021

Microsoft Just Raised the Bar

Paul Carroll, Editor-in-Chief of ITL

While insurance has been steadily improving communications with customers through gradual adoption of chatbots, Microsoft just put another big item on the industry’s technology to-do list: speech recognition.

Microsoft’s announcement on Monday that it is buying speech-recognition firm Nuance for $16 billion means that insurers will have to confront the technology — likely sooner than they had expected. Big Tech has already been getting consumers accustomed to having their speech understood by devices, mostly via Siri and Alexa, and the Microsoft purchase of Nuance will push speech recognition into many business transactions. All industries, including insurance, will have to react as Big Tech again raises the bar for what constitutes a reasonable customer experience.

So, it’s worth spending a minute thinking about what speech recognition will — and won’t — change in insurance… continue reading >

Majesco Webinar


The pace of change has accelerated to hyper-speed, making digital insurance business models more important than ever. Learn what the Leaders are doing.
 

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SIX THINGS

The Future of AI in Insurance
by Karin Golde

Organizations hoping to deploy artificial intelligence have to know what problems they’re solving — no vague questions allowed.

Read More

10 Ways to Prepare for the Hard Market
by Jeff Arnold

In soft markets, differentiation can be challenging. But hard markets present an opportunity for the best insurance professionals to stand apart.

Read More

Digital Revolution Reaches Underwriting
sponsored by Intellect SEEC

The digital revolution in insurance, which began in distribution and then spread to claims, has now reached underwriting in a big way.

Read More

How to Deliver the ROI From AI
by Monte Zweben

A technology has emerged that can harness AI across all departments of a business like never before. It’s called a feature store.

Read More

Benchmarks, Analytics Post-COVID
by Kimberly George and Mark Walls

The pandemic introduced several variables that question the validity of actuarial models and benchmarks.

Read More

The Key to the Future of Mobility
by Bill Powers

Telematics can help solve some of the insurance industry’s oldest problems, but, first, insurers must win the client’s trust.

Read More

Time to Start Over on Secondary Towing
by Rochelle Thielen

The current system for secondary towing is excruciating. The only reasonable solution is to start over from scratch.

Read More

Webinar :
The Alarming Surge in Ransomware Attacks

sponsored by Tokio Marine HCC – Cyber & Professional Lines Group

Join Michael Palotay, Chief Underwriting Officer for Tokio Marine HCC – Cyber & Professional Lines, and Paul Carroll as they continue their discussion on ransomware, cyber attacks, and how businesses can protect themselves.

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MORE FROM ITL

April’s Topic: Agents & Brokers

Mark Twain reportedly once responded to a rumor of a serious illness by saying, “Rumors of my death have been greatly exaggerated.”  Insurance agents and brokers could have said the same thing over the past decade and will likely be parrying those rumors for years to come.

There’s no doubt that agents & brokers inhabit a world going digital and not every agent will migrate easily into the ever-more-digital world, but those who do will find the work more rewarding, both for themselves and for their ever-more-loyal clients.

Take Me There

The Alarming Surge in Ransomware Attacks

Join Michael Palotay, Chief Underwriting Officer for Tokio Marine HCC – Cyber & Professional Lines, and Paul Carroll as they continue their discussion on ransomware, cyber attacks, and how businesses can protect themselves.

Watch Now

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Microsoft Just Raised the Bar

While insurance has been steadily improving communications with customers through gradual adoption of chatbots, Microsoft just put another big item on the industry’s technology to-do list: speech recognition.

Microsoft’s announcement on Monday that it is buying speech-recognition firm Nuance for $16 billion means that insurers will have to confront the technology — likely sooner than they had expected. Big Tech has already been getting consumers accustomed to having their speech understood by devices, mostly via Siri and Alexa, and the Microsoft purchase of Nuance will push speech recognition into many business transactions. All industries, including insurance, will have to react as Big Tech again raises the bar for what constitutes a reasonable customer experience.

So, it’s worth spending a minute thinking about what speech recognition will — and won’t — change in insurance.

My bet, having followed the development of a host of fundamental changes in technology for decades now, is that speech recognition mostly will mean the end of the sorts of decision trees that customers now have to go through to get to the right spot in a call center or a corporation.

At the moment, such automated answering systems generally ask callers to respond to a series of options by saying a number or pressing a key. The systems may then ask callers to repeat the process, maybe even multiple times, as a decision tree gradually narrows down the options and determines where to direct the call.

With a system based on speech recognition, customers will simply begin a conversation by saying something like, “I’m calling to check on a payment,” or, “I’d like to check on the status of my claim.” The artificial intelligence may be able to respond immediately, if it can match the caller’s phone number with the appropriate records. If not, the AI can then ask a question or two and respond to simple questions on its own or transfer the call to the right human representative for a more extended conversation.

If a caller wants to speak Spanish, he’ll just start talking in Spanish rather than having to oprima numero dos.

Doing away with these automated menus won’t materially change any caller’s life, but they are enough of an annoyance that insurers and big agencies will need to get rid of them as soon as speech recognition allows. As the world continues to move toward self-service, the industry will need to keep expanding the capabilities of the speech-recognition systems to handle more complex queries and more extended conversations — along the lines of the progression occurring with chatbots.

The change to speech recognition will be a heavy lift. It not only requires mastering the speech recognition technology but tying it into back-end computer systems and integrating voice queries with customer interactions via text message and via the website or app. Training and staffing of agents will need to change, too.

The shift won’t have to happen right away. Nuance (which developed the initial speech-recognition technology for Siri) has a heavy focus on healthcare, so Microsoft won’t immediately be raising customer expectations across all industries. But the change to speech recognition will take long enough and be disruptive enough that insurance companies should develop road maps soon.

Now, I’ve seen some project even more sweeping changes because of speech recognition, but the claims are overwrought. Yes, speaking is often more convenient than typing, but speech has its limitations. If I’m traveling alone and looking for a hotel or a place to eat, I might ask Siri to give me some options, but I’m going to pull off to the side of the road to scroll through them and investigate. And if I’m going to need to read about such relatively simple options, imagine how much more important reading is for all but the simplest queries related to insurance.

Speech won’t become the primary interface for the internet any time soon, despite what some have written and despite great improvement in the technology.

But speech recognition still marks a significant change, and Big Tech is once again setting rules for customer experience that the rest of us will have to abide by.

Stay safe.

Paul

P.S. Here are the six articles I’d like to highlight from the past week:

The Future of AI in Insurance

Organizations hoping to deploy artificial intelligence have to know what problems they’re solving — no vague questions allowed.

10 Ways to Prepare for the Hard Market

In soft markets, differentiation can be challenging. But hard markets present an opportunity for the best insurance professionals to stand apart.

How to Deliver the ROI From AI

A technology has emerged that can harness AI across all departments of a business like never before. It’s called a feature store.

Benchmarks, Analytics Post-COVID

The pandemic introduced several variables that question the validity of actuarial models and benchmarks.

The Key to the Future of Mobility

Telematics can help solve some of the insurance industry’s oldest problems, but, first, insurers must win the client’s trust.

Time to Start Over on Secondary Towing

The current system for secondary towing is excruciating. The only reasonable solution is to start over from scratch.

When Incumbents Downplay Disruption…

An unmanned car driven by a search engine company? We’ve seen that movie. It ends with robots harvesting our bodies for energy.

That is a line from a 2011 Chrysler car commercial mocking Google’s self-driving car project.

Another Chrysler commercial was even blunter: “Robots can take our food, our clothes and our homes. But, they will never take our cars.”

Chrysler’s early mocking of Google’s efforts exemplifies the fact that few cling to the status quo tighter than the companies that best understand it and have the most stake in preserving it. It is human nature to value what one does well and look askance at innovations that challenge the assumptions underlying current success. Sprinkle in some predictably irrational wishful thinking and you have the mindset that too quickly dismisses potentially dangerous disruptions.

Ironically, seven years later, those Google “robots” are now mostly driving Chrysler Pacifica minivans. Those robots have taken Chrysler’s cars and driven more than 10 million miles. Chrysler benefits by selling cars to Waymo, the spinoff from that Google project, but not nearly as much as it might have from building the robots themselves. Waymo is valued at $175 billion, about five times Chrysler’s market value.

History brims with other examples.

When Alexander Graham Bell offered to sell his telephone patents to Western Union, the committee evaluating the deal concluded:

Messrs. Hubbard and Bell want to install one of their ‘telephone devices’ in every city. The idea is idiotic on the face of it… This device is inherently of no use to us. We do not recommend its purchase.

Ken Olsen, who disrupted IBM’s mainframe dominance with his DEC minicomputers, mocked the usefulness of personal computers in their early days. He declared, “The personal computer will fall flat on its face in business.” Olsen was very wrong, and DEC would eventually be sold to Compaq Computer, a personal computer maker, for a fraction of its peak value.

See also: Why AI IS All It’s Cracked Up to Be  

Steve Ballmer’s initial ridicule of Apple’s iPhone is also legendary, though the words of the then-CEO of Microsoft were mild compared with the disdain on his face when asked to comment on the iPhone launch.

Years later, after he retired, Ballmer insisted that he was right about the iPhone in the context of mobile phones at the time. What he missed, he admitted, was that the strict separation of hardware, operating system and applications that drove Microsoft’s success in PCs wasn’t going to reproduce itself on mobile phones. Ballmer also didn’t recognize the power of the business model innovation that allowed the iPhone’s high cost to be built into monthly cell phone bills and to be subsidized by mobile operators. (Jump to the 4:00 mark.)

The biggest challenge for successful business executives—like Ballmer, Olsen and those at Western Union—when confronted with potentially disruptive innovations is to think deeply about potential strategic shifts, rather than simply mock innovations for violating current assumptions.

Another perhaps soon-to-be classic example is unfolding at State Farm Insurance.

State Farm released an TV ad that is a thinly veiled attack on Lemonade, a well-funded insurtech startup. Lemonade makes wide use of AI-based chatbots for customer service. State Farm, instead, prides itself on its host of human agents. In the ad, a State Farm agent says:

The budget insurance companies are building these cheap, knockoff robots to compete with us… These bots don’t have the compassion of a real State Farm agent.

As I’ve previously written, AI is one of six information technology trends that is reshaping every information-intensive industry, including insurance. In fact, as I recently told a group of insurance executives, I believe insurance will probably change more in the next 10 to 15 years than it has in the last 300.

See also: Lemonade Really Does Have a Big Heart  

That doesn’t mean that Lemonade’s use of chatbots for customer service will destroy State Farm. But, as State Farm should know, customer-service chatbots are only one of numerous innovations that Lemonade is bringing to the game. As several McKinsey consultants point out, AI-related technologies are driving “seismic tech-driven shifts” in a number of different aspects of insurance. Lemonade has also adopted a mobile-first strategy and is applying behavioral economics to drive other business model innovations.

State Farm executives need to get beyond the mocking and think deeply about how emerging innovations might disrupt their strategic assumptions.

One way to do so is being offered at InsuranceThoughtLeadership.com, where ITL editor-in-chief and industry thought leader Paul Carroll has offered a “State Farm Lemonade Throw Down.” Carroll offers to host an online debate between the two firms’ CEOs about how quickly AI technology should be integrated into interactions with customers.

Lemonade’s CEO, Daniel Schreiber, has accepted. I hope Michael Tipsord, State Farm’s CEO, will accept, as well.

Better for Mr. Tipsord to face the question now, while there is ample time to still out-innovate Lemonade and other startups, than to be left to reflect on what went wrong years later, as Steve Ballmer had to do with the iPhone.