SMA remarked in the report, part of its Insurance Ecosystem Research Series, that "IT approaches that deliver the flexibility needed to respond to changing market conditions and customer buying behaviors is no longer optional--it is mandatory for survival and success."

Insurers, the report said, now have a renewed interest in packaged, component-based enterprise solutions with over 50 percent of commercial lines insurers saying they are using component-based development and 89 percent of personal lines carriers custom-building or building and buying their solutions using components.

"The market is solid for portable solutions that are not tied to unique architectures and platforms," the firm found.

SMA said that insurers, historically cautious about IT purchases, are generally not aware of the choices available to them and say it is "a daunting challenge" to figure out who has suitable offerings among more than 1,000 providers who service their market.

The survey data was collected from 96 respondents from a range of firms and comprehensive interviews with 28 leading industry executives and 100 hours of discussion with senior IT executives.

In examining buying behavior the study divided insurers into four tiers: Tier 1 wrote 54 percent of premiums in the market; Tier 2 wrote 24 percent; Tier 3 wrote 13 percent; and Tier 4 wrote 9 percent.

The top two tiers account for 83 percent of the IT spending, the study found, and the number one business driver for technology investment is business growth.

When it comes to making decisions on buying, Tier 1 insurers have a more complex process, while most Tier 4 insurers have fewer decision processes, said SMA.

Tier 1 companies were reported to often lead the way and have a real appetite for innovation, but are often challenged moving narrow pilot efforts into mainstream operations.

And, some Tier 4 niche operations with very focused offerings can more easily accommodate change than larger firms, but those "in Tier 4 writing specialty lines often have difficulty finding packaged solutions that meet their specific needs and find their only option is to create the solution themselves or with partners," the report said.

Among all insurers, 46 percent said they developed their technology by building and buying components, 26 percent use custom development and 24 percent purchase software packages. Four percent outsource development, and only Tier 3 and Tier 4 use this method.

Karen Furtado, a spokesperson for SMA, said that among the more notable findings in the report was the variety of triggers for IT purchases. For example, among insurers with personal and commercial lines, business process optimization was the driver for 68 percent, but it was not a high driver at all for those with commercial only or personal only lines, she noted.

The 24-page report can be purchased online at www.strategymeetsaction.com/our-research for $1,695.