Insurers are increasingly investing in new technology areas such as mobile and big data along with the usual legacy system updates, Novarica found in its latest annual study of U.S. insurer IT budgets.
“With a heavy focus on core system replacement and new capabilities like digital and analytics, the industry is slowly but surely moving itself forward,” Novarica President and CEO Matthew Josefowicz said in prepared remarks.
Josefowicz added that insurers are keeping their spending ratios within historical norms even as they shift more spending toward transformative technology.
Novarica generated its study results from 104 respondents representing a large cross section of property/casualty and life/annuity insurers, with companies of various sizes and lines. Among the report’s key findings:
- Most insurers expect to increase their average IT budgets slightly for 2016, while staying within historical norms. With that said, deployment rates among insurers of mobile technology are expected to come close to doubling over the coming year.
- More than 1/3 of insurers are pursuing core policy administration technology replacement, but this varies by insurer size and sector.
- 15 percent of insurers are planning to launch or pilot new software as a service (SaaS)/cloud for core insurance applications in 2016.
- Close to half of insurers are planning to enhance their portals and business intelligence/analytics, across all company sizes and sectors.
- Formerly “emerging” technologies such as SaaS, cloud computing and mobile have gone mainstream. More than half of insurers in the study sample said they have SaaS/cloud deployment for non-core insurance systems. Nearly half have said they support mobile access for policy holders, and more than 25 percent said they back using big data technology.
- Most insurers now categorize their IT spending under the “run/grow/transform” framework, rather than the more typical “maintenance/new projects” categories.