Docker containers and the cloud are being employed in combination to modernize IT in an insurance industry sector long known to be a laggard when it comes to adopting emerging technologies.
Socotra, a provide of cloud-native applications running on the Amazon Web Services (AWS) cloud, has developed an integrated set of underwriting, policy administration, claims, billing and reporting applications based on a microservices architecture and a shared object model based on a mix of SQL and NoSQL databases enabled by Docker containers. The goal is to enable a vertical industry that still relies primarily on technologies developed at the turn of this century to leap forward several decades, says Socotra CEO Dan Woods.
Investors in the Socotra platform now include USAA along with CrunchFund, Founders Fund, Greenoaks Capital, SciFi VC, SV Angel and Vulcan Capital, as well as angel investors Ron Conway, Michael Ovitz and Joe Lonsdale. USAA plans to modernize many of its processes by replacing legacy applications with a cloud service.
Woods says such decisions don’t come easy in a notoriously conservative insurance industry sector. Shifting to a cloud application model enabled by Docker containers provides the foundation on which the insurance industry should be able to centralize enough data to the point where investments in artificial intelligence (AI) capabilities capable of, for example, identifying fraud become more feasible, adds Woods.
Despite being risk adverse the insurance industry spends billions of dollars a year on IT. Like most industries, however, most of that spending goes towards maintaining an existing application portfolio. The amount of money allocated to new applications as percentage of the overall IT budget remains relatively small. A recent Deloitte report noted that one of the issue that insurers need to overcome in 2018 are outdated application and unwriting processes that both increase costs and act as a drag on sales. One way many organizations are trying to free up budget to develop innovative applications is by relying more on cloud infrastructure.
Obviously, Socotra is betting that rather than choosing to individually develop a set of applications to handle the same basic processes, insurers will embrace cloud applications. That move in theory would allow insurers to focus more of their effort on processes than application development. It’s unclear, however, just yet how tightly coupled insurers will view applications and processes. Every vertical industry is now trying to strike a balance between rote business processes that can be served by an application and custom processes that enable them to provide a superior customer experience. In fact, because of that issue almost every provider of a software-as-a-service (SaaS) application now provides access to some form of an application development platform alongside their application.
The good news is that Docker containers make it easier to add and replace new functionality. Rather than having to essentially update an application by providing what amounts to a patch, developers can more easily replace one set of containers with another without having to disrupt the entire application. The biggest issue now is not so much the underlying technology as much it is the level of DevOps sophistication organizations can now bring to bear in a world that will soon be dominated by containerized applications.