Core in the cloud is a hot topic that has garnered a lot of interest and an equal amount of debate as insurers confront the challenges that the digital world brings to our industry, and certainly, insurers' use of cloud has increased.

Even though there has been a lot of discussion on this topic, the exact momentum of core in the cloud has been difficult to pinpoint.

SMA's latest research, published in Insurers' Core Systems Buying Trends, reveals that cloud deployment has reached a clear tipping point in insurance: 36% of all core systems purchased in 2015 will be deployed in the cloud, especially policy and claims. In fact, this is the first year that SMA has found that a majority of new core systems will not be deployed on-premise: 58% of insurers made the critical decision to outsource the hosting, maintenance, and upgrades.

Major drivers for insurers turning to the cloud

The challenges of both security and resources are major drivers for insurers turning to the cloud. Although insurers of all sizes are choosing cloud, those with DWP under $250M (Tier 4) are the most likely to be using core in the cloud, especially suites. Tier 4 insurers must hone in on market differentiators that keep them abreast of evolving technologies and energize their customer base. By taking advantage of core in the cloud, these smaller insurers offload a large portion of the work that has consumed their IT staff, allowing them to refocus their energies on the kind of competitive differentiation that cloud deployment makes possible.