There may have been doubts in the recent past about where cloud technology fit into the insurance IT landscape, but that all seems forgotten now. I spoke to a few vendors while here at the IASA conference about the effect cloud is having on their business and my inquiries were met with enthusiasm.

Phil Kiekhafer, director of marketing for ISCS had a simple response when I asked where his company is headed: ISCS recently hired a senior director of cloud, he says. That's one way to display confidence in where things are headed.

The reason is fairly simple: "Cloud will reduce implementation costs so much," said Kiekhafer.

Kevin Mason, director of product development for Instec points out the reason insurers are putting aside their concerns about security issues is because of the cost savings.

"When it comes to a data center in the cloud, economics trumps security," says Mason.

Of course there are few areas that economics does not trump in the business world and the list of things it won't trump is probably made up of illegal activities.

It's not that insurers are no longer worried about security in the cloud, but if they waited for every security environment to be flawless their patience would be sorely tested.

After all, insurers are still fighting security issues on their own hosted servers, so why is the cloud more dangerous? The answer is it's probably not much more dangerous, but companies seem to feel more secure when their data is locked away in their very own data center.

Mason points out the battle between Amazon Web Services and Microsoft Windows Azure for control of the market has been beneficial to everyone. An old-fashioned price war has been taking place over the past year and vendors such as ISCS and Instec can only smile as they pass the cost savings along to a grateful carrier population that likes nothing better than a reason to smile itself.

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