Insurer IT spending set to increase nearly 5% this year

A report from Strategy Meets Action (SMA), an insurance strategic advisory firm, has found that insurer IT spending is set to increase almost 5% this year over 2014.

The annual research report, 2015 Insurance Technology Priorities and Spending, is based on a survey of 105 North American insurance business and technology executives and ongoing observations from SMA’s advisory and consulting engagements with insurers. The report reflects the statue of the industry technology investments, business drivers and ongoing plans for specific projects for p&c and l&a insurers.

Key findings in the report include the following:

• Business optimization/transformation is the top business driver for investment, surpassing growth for the first time.

• Spending for business application projects varies significantly by line of business, reflecting different stages in the transformation journey. The top projects are insured portals, agent/producer portals, rating engines, and core system replacements.

• The top technology oriented projects are focused around mobile and BI/analytics, with data warehousing, predictive analytics, and big data included in the mix. [click image below right to enlarge]

“Now is the time to make bold investments and begin new strategic initiatives, and many insurers appear to be doing just that as they journey toward becoming digital insurers,” said Mark Breading, SMA Partner and co-author of the report, in a press release.

“We are seeing some big shifts in priorities and projects this year,” observed Deb Smallwood, SMA founder and the report’s other co-author. “P&C personal lines carriers are further along in core systems replacements and are now shifting their emphasis to initiatives that capitalize on those modern platforms. In commercial lines, the top project area for 2015 is policy replacement, and we see significant activity in this space. In L&A, the investment continues to shift toward the front office. All these project activities support the evolution toward the digital insurer.”