Most insurers only plan modest increases in their IT budgets in 2015. And while other industries are spending more and more in emerging tech areas such as mobile insurance, big data and the cloud, very few in the insurance field plan to do the same, according to a new Novarica survey.
Those trends emerge from a survey of 88 insurer chief information officers or their equivalents – all members of the Novarica Insurance Technology Research Council – about their IT budget and plans for 2015.
If anything, the results reflect the conservative nature of the insurance industry as it is confronted by outside technology changes and advances – slow and steady with no rush toward early adoption of new bells and whistles.
“Despite the rapid changes in technology across the economy, the main theme of 2015 insurer IT budgets and project priorities is one of continuity. Again,” Novarica said in its summation of the responses.
Specifically, overall average IT spending ratios are growing slightly to 3.8 percent. That compares to 3.5 percent or 3.6 percent in past years, Novarica said. But the company said these slight jumps are not unusual.
“Average IT spending ratios (IT budget as a percentage of premium) remains consistent with historical norms, indicating that budget increases are tracking premium growth rather than exceeding it in most cases,” Novarica said. “Novarica regards this mostly as a statistical aberration within a shifting sample group rather than evidence of a significant reallocation of resources in the industry.”
Specifically, 60 percent of large property/casualty insurers said they’d boost their IT spending in 2015 versus 2014, and 49 percent of small to mid-sized companies responding in the survey said they would do the same, Novarica noted.
Other notable findings from the report:
Here’s a list of the numbers and types of insurers who participated in the Novarica survey: 6 personal lines insurers, 22 commercial/specialty companies, 8 mono-line workers comp firms, 33 multi-line property/casualty insurers, and 19 health/life insurers, Novarica said. The company supplies information and analysis of markets, operations, and technology for financial services and insurance executives.