RESEARCH REPORT
The Real Cost Curve of Insurance Cloud Migration
August 31, 2026
Summary
Report Summary
Cloud migration business cases in insurance are consistently built on cost projections that undercount specific categories of cost that show up reliably during and after migration. This report looks at where those projections tend to be accurate, where they consistently miss, and what that means for how carriers should build the business case.
Where Initial Projections Hold Up
- Infrastructure cost comparisons are the most reliable element of a migration business case
- Compute and storage benchmarks are well-established and widely referenced
- Direct on-premises vs cloud cost is typically the least contested part of the projection
Direct infrastructure cost comparisons — on-premises hardware and data centre costs versus cloud compute and storage pricing — are usually reasonably accurate, since these are the most visible, most heavily benchmarked numbers in any migration business case.
Where the Gap Consistently Appears
Three undercounted cost categories
Parallel-run costs, egress and inter-service transfer fees, and ongoing compliance tooling are the three categories that most consistently exceed initial estimates in insurance migrations.
The cost of running legacy and cloud systems in parallel for longer than planned is consistently undercounted, because policy and claims data migration in insurance tends to take longer than initial estimates due to decades of accumulated data quality issues in legacy policy administration systems.
Egress and inter-service data transfer costs scale with usage in ways that are hard to estimate before migration is actually underway. The ongoing cost of cloud-specific security and compliance tooling required to meet insurance regulatory requirements is often modelled as a one-time setup cost rather than the ongoing operational cost it actually is.
What Actually Predicts a Business Case Holding Up
Carriers whose migration costs tracked closest to their original projections were the ones that explicitly budgeted for an extended parallel-run period rather than assuming a clean cutover, and that modelled compliance and security tooling as a recurring operational line item from the start rather than a project cost that ends at go-live.
Carriers that built their business case around more optimistic, cleaner assumptions consistently saw actual costs land meaningfully above projection — not because the underlying cloud economics were wrong, but because the business case did not account for the specific, well-documented cost categories that insurance migrations reliably hit.
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