As insurance companies prepare for 2018, many familiar topics appear at the top of priority lists – core systems replacement, data and digital strategy and talent, for example. But Novarica president Matt Josefowicz says “that’s actually starting to change.”
“The amount of time CIOs have spent on security has doubled over six months,” Josefowicz says. “It’s not completely reflected in the spending projections yet, but it is in the planning and the priorities.”
Novarica recently completed a survey of the 93 members of its Insurance Technology Research for its Insurer IT Budgets and Projects 2018 study, released last week. Core systems still represent the bulk of priority for insurers, but “mindshare” related to security is growing, Josefowicz explains.
“Even though the average numbers are consistent and the topline spending levels are consistent, when we dig into the trends, we see the beginnings of a shift,” he says. “The multi-year core systems projects are coming to the end and there’s much more enhancement activity than replacement.”
Meanwhile, new regulations by New York State that require increased record-keeping and reporting on insurers’ security infrastructures, coupled with the shock to financial institutions caused by the Equifax breach, are occupying CIOs’ time, Josefowicz says.
“Security isn’t necessarily causing an expenditure on new product and software, but it’s using up a lot of staff bandwidth to make sure they’re going to be in compliance,” he says. “It’s like a mini Sarbanes-Oxley for security.”
Novarica’s research also revealed a split based on line of business when it comes to digital priorities, Josefowicz says.
“Life insurers tend to be focused on digital marketing, while P&C carriers are looking more at data and analytics,” he says. “That’s reflected in the breadth of players coming into the insurtech market now.”
The insurtech threat has metastisized to encompass more than just new insurgent companies coming into the market, Josefowicz elaborates. Legacy insurers are also looking at their counterparts to see who is able to deploy digital experiences and products quickly and easily and gain market share.
“The insurance IT leaders and business leaders we’ve talked to are looking over their shoulders,” he says.
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