This report is written primarily for small and midsize life and annuity insurers—because they are the segment mostly likely to be facing significant cloud decisions in the next few years. This report does not provide specific tools for analyzing costs in the cloud. Rather it provides a framework for thinking about the cost and value considerations that an insurer should address when migrating on-premises technologies and processes to cloud deployments.

Life and annuity insurers considering cloud transitions should include four categories of technology costs in their analysis: core operating systems; IT staff, hardware, software; analytics (including predictive AI analytics and Gen AI); and data storage.

An insurer should also consider core operational processes and sources of value when making cloud decisions. The core operational processes combine significant impacts on revenue, staffing costs, and underwriting profitability. The sources of value focus on process speed, process quality, decision quality, and change agility.