Insurance IT spending shifts toward digital
From a tech strategy perspective, insurers are focusing more on next-generation digital technologies than traditional administrative platforms.
That's according to Novarica's Insurer IT Budgets and Projects 2019 study, which surveyed 92 members of its technology research council across P&C and life insurance. As a percentage of premium, IT budgets hover around 3.6%, the average for the past eight years.
But it's within that 3.6% where the changes come. Projected budget devoted to core systems is down 4% from last year, while digital is up 3%. Included in that digital classification are, according to Novarica, "portals, mobile, and optimizing internal information flow and user experience."
"Although more than 25% of insurers are planning to replace policy, billing, and claims systems, overall rates continue to trend lower than in prior years as more insurers complete their multi-year projects," writes survey author Matt Josefowicz. "Overall budgets are starting to shift away from core applications and toward digital engagement, analytics, and ever-growing security needs."
By lines of business, priorities vary. While both P&C and life insurers cited analytics as a top priority, life carriers were more likley than P&C insurers to move policyholder self-service and digital marketing/customer engagement to the tops of their lists. P&C insurers, meanwhile, are focusing on optimizing internal workflows and speed-to-market.
"Life/annuity insurers are focused on digital, optimized workflow, and operating efficiency as they face changing customer expectations and continuing margin pressure in legacy blocks of business," Josefowicz writes. "Property/casualty insurers are focused on analytics and speed to market as market competition and the threat of adverse selection continue to drive a need for better and faster product deployment."