But Novarica does note that while no respondents are planning “much higher” budgets for 2014, only a handful of carriers in each industry measured category (large life and annuity carriers, mid/small life and annuity carriers, large P&C and mid/small P&C) plan to decrease IT budgets. Additionally, life and annuity carriers are mostly planning increases for the coming year, unlike prior years when these carriers were more likely to show flat or decreasing budgets.

In another recent report, Ovum, discussing projected IT budgets through 2017, noted a similar shift for life companies, stating that these companies will represent much of the overall spending growth over the next few years since they suffered more than P&C insurers during the financial crisis, and therefore saw deeper budget cuts during that time.

The incremental advancement in budgets and priorities dovetails with insurers' cautious assessments of their own IT capabilities. Novarica states that fewer than half of insurers “consider themselves to have strong capabilities in any area except IT security, financials, claims and rating,” adding that most insurers see themselves as investing “to get up to the bar, not over it.”

For the dollars they are investing, insurers say they mostly expect to achieve growth and operational effectiveness, says Novarica, with “competitive parity” also ranking high among respondents. Interestingly, as regulatory scrutiny of the industry increases, Novarica says only large life and annuity carriers rated “compliance” as a top strategic goal driving insurer IT budgets. “[N]one of the other groups of respondents rated it as more than average importance,” according to the report.

As far as project priorities for 2014, Novarica says policy-administration systems, business intelligence/analytics, portals and claims (for P&C insurers) were the most common responses. According to the survey, more than half of all respondents in every category but large life and annuity insurers rated policy administration in their top-three priorities. But Novarica adds, “It is important to note that top priority doesn't necessarily mean a replacement of the system. Major enhancements, or even minor enhancements, can be top-priority activities for insurers.”

When asked to list the top three capabilities that insurers want IT to deliver in 2014 and beyond, business intelligence/data analytics was the most common response for all carriers except mid/small life and annuity companies (for large life and annuity companies, business intelligence/data analytics tied for first with speed-to-market for new products).

Novarica states, “Core policy administration systems and business intelligence remain areas of continued investment,” adding that “most insurers still struggle to deploy strong capabilities in most of their core areas, at least by their own assessment.”

Still, despite the cautious self-assessments and consistent spending ratios and project priorities, Novarica points out that some insurers are looking into newer areas of investment, “with slight growths in deployments and pilots in mobile and social.” Additionally, large P&C carriers were twice as likely as last year to be investing in, at the very least, piloting the infrastructure for handling true big data.