IT spending in the insurance industry will not slow in 2012, according a new study published by Novarica, a research and advisory firm focused on technology strategy in insurance and financial services.
Novarica's 26-page report, US Insurer IT Budgets and Planning for 2012, is based on a survey of CIOs and equivalent executives from 132 U.S. insurers. The majority of insurers expect to increase their IT budgets slightly in 2012, according to Novarica, as they continue to focus on delivering business capabilities to support growth, increase competitive parity, and improve operational effectiveness.
“Insurers have a clear-eyed self-assessment of the state of their internal systems,” says Matt Josefowicz, partner and managing director of Novarica and author of the report. “On average, insurers rate nearly half of their systems below 'acceptable.' It's the need to improve these capabilities rather than external factors like the economic recession and compliance pressures that are the primary drivers for most insurers' IT budgets and plans.”
Other findings from the report include:
• More than one-third of insurers are either in the middle of a core policy administration system replacement, or planning one for 2012. Claims systems and billing systems have similar levels of activity.
• While agent and customer portals and business intelligence systems are less likely to be replaced, nearly half of insurers are planning replacements or major enhancements in these areas.
• Mobile, tablets, social media, and cloud are still primarily in limited deployment or pilot programs for most insurers, where they are deployed at all. While there is significant planned activity in these areas, most of these are ancillary to the major strategic projects that consume IT budgets and management bandwidth.
A four-page extract of the report is available online. The full report can be purchased there as well.
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