Analytics and mobile are the top priority technologies for insurers this year, according to a recent report from Strategy Meets Action (SMA). Expect heavy investments in business intelligence and analytics, as commercial lines carriers leverage predictive models and big data to improve underwriting and claims. Half of all personal lines insurers have major mobile projects planned, with 21% expecting to launch new apps in 2014, SMA says.
SMA's report, "2014 Insurance Ecosystem: Insurer Technology Spending, Drivers and Projects" indicates that there is growing optimism in the insurance industry and insurers are aggressively positioning themselves toward growth and transformation.
"Our research highlights an unmistakable trend in the insurance industry–IT initiatives are having a broader impact on companies than ever before. Five years ago, only 13% of insurers told us that their companies were in transformation mode. Now 32% say they are transforming, largely enabled by major IT initiatives," said Deb Smallwood, SMA founder and one of the report's authors.
The findings, based on a survey of 100 insurance executives, show that nearly two-thirds (63%) of insurers plan to increase IT budgets by 3% compared to last year, with 69% of respondents expecting to increase their budgets through 2017.
Business growth in current lines and markets is the No. 1 driver of IT investments, SMA reports. Other factors driving significant IT spending are business optimization, customer service, competitive pressures and cost containment. Compared to 2013, customer service ranks higher in importance and cost containment is a lower priority, which "reflects the growing optimism and willingness to invest for competitive advantage," the report states.
IT investments will grow in the front, middle and back offices. Spending will increase the most in new business/underwriting (66% of insurers) and product development (59%). "Product development is seeing increasing automation as insurers try to get products to market faster, become more innovative with new products, and better manage products through their full lifecycle," SMA says.
Core replacement and modernization projects are top strategic initiatives for 2014. P&C commercial lines insurers are focused on their core systems, with 36% of insurers are implenting new policy systems this year and another 36% plan to enhance existing systems. Personal lines insurers are focused on improving the agent/broker portals and customer experiences.
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