SaaS for the Insurance Industry

An article published on Insurance Networking highlighted "Security" and "Ability to Customise" the system as two main drawbacks of SaaS in the context of the insurance industry.

I agree that Security is a major problem - who hasn't dealt with IT departments that are overly concerned about allowing customer data outside the firewall? And with good reason, given some of the regulations applied in various countries.

However in terms of the second problem (Customisation), I am less convinced. If you consider Salesforce.com (used by a number of large insurers, and supports significant integration and customisation) then you could argue that the second problem (customisation) is a non-issue. Instead, I think the comment reflects the nature of smaller-to-medium-sized SaaS offerings. It is unlikely that anyone will be able to convince 37Signals to customise their software for one company. But it's equally unlikely that an application of this size this would ever be considered a "Core" system for a large insurance company.

Feedback on the article prompted a second article that points out that SaaS may be more welcome in non-core parts of the business. This is true, but misses the point of the first article - there's no-one offering (or attempting to offer?) a core policy administration system on a SaaS basis with all that implies (cloud, multi-tenancy, charging model, etc). A possible business opportunity? Surely a difficult balance of business requirements to meet while doing so!