Gartner's 2013 survey of U.S. life and P&C insurers found that there are three primary drivers for legacy modernization improvement: services for customers or business partners, the level of operational efficiency, the time to market of new products and services.

Insurers have a few options for modernization legacy systems, including maintenance and replacement. Most prefer to mitigate the risks of legacy modernization by gradually replacing individual applications, or running new and old systems in parallel, Gartner says.

CIOs who fail to conduct realistic project planning or sufficient risk analysis will underestimate the complexity of legacy modernization.

Recommendations:
- Assess the business value and technical quality of specific applications and prioritize modernization projects

- Use risk maps to compare different legacy modernization options, map the risk impacts of these options against your company's risk threshold and communicate the results to senior management.

- Assess the IT department's degree of project management skills to monitor legacy projects

2. Cloud Computing
The hidden costs of cloud computing, such as those associated with integration, limit real-world cost savings. The primary benefit of cloud computing is flexibility, Gartner says, especially in areas of software as a service and in private clouds, which enhance IT architecture options.

A major challenge for CIOs is separating the reality of cloud offerings from the hype. Many "cloud-ready" options are not capable of providing benefits such as scalability and metered pricing.

Business complexity and customization also are barriers to the cloud. The greater the complexity, the less suitable it is for cloud adoption, Gartner says.

Recommendations:
- Identify cloud objectives and potential benefits that extend beyond cost savings

- Evaluate the cloud readiness of your software providers

- Map cost, security and technology considerations against the risks and benefits of different cloud models

3. Risk Management and Compliance Solutions
Regulatory pressures are having an immediate impact on IT organizations, especially in the area of risk management. But IT is not always well-positioned to respond. Many insurance  CIOs do not oversee risk management and compliance technologies, which increases the risk of suboptimal silo-based sourcing, data management and IT operations.

Gartner estimates that insurance CIOs spend as much as one-third of their annual budgets on applications for risk management, security or disaster recovery.

Recommendations:
- Create an inventory of the risk management and compliance solutions current used across the company. Identify anyone who manages these technologies and assess their willingness to hand over responsibility to IT.

- Identify business synergies between the different regulations and their technology implications.

4. User Experience Technologies
To remain competitive, insurers must provide positive interactions with both customers and distribution partners across all touchpoints, including customer or agent portals and mobile sites. As the portal becomes more influential, it will need to be enhanced with new functionality—customized, tailored and collaborative—to support cross-channel interactions. Real-time content rendering will drive user satisfaction, and CIOs must invest in mobile applications, social media content, electronic forms and e-signature capabilities to improve customer experience.

Recommendations:
- Map direct marketing needs and identify new user experience management technologies that support those goals.

- With your marketing team, assess your customers' cross-channel traffic patterns and multichannel interaction needs. Deliver a technology experience that fits these patterns.

5. Event-driven Architectures and Real-time Operational Intelligence
Business executives need to be more agile in detecting changes to their business operations and quicker to respond to these changes to seize opportunities from competitors. For this reason, CIOs are developing event-driven architectures that leverage digital channels (portals, mobile devices and telematics) with new data capabilities.

Real-time operational intelligence includes data changes derived from activity, from new data being collected or from predictive modeling tools. An event triggers an action, generally automated. Real-time insight allows processes to be changed early, before bottom lines are impacted significantly, and is valuable for customer retention and cross-selling initiatives.

Recommendations:
- Develop real-time dashboards, interactive portals, channels and enterprise-wide analytics.

- Build a multichannel architecture that enables channel integration and interaction.

- Build real-time alerts for key business leaders

- Build real-time customer response systems based on needs identified by the marketing, claims and sales organization. Create automated, immediate responses to customer events.

6. Mobile Applications and Technologies
CIOs are pursuing strategies to enable sales and service functions on mobile devices, especially tablets. P&C insurers' first priority has been leveraging mobile devices for claims, but policy administration service access and pocket wallets for quoting also are increasing in priority. Most P&C insurers have not achieved the desired level of consumer adoption of their native apps, Gartner says, which has caused many insurers to rethink their approaches, such as toward smartphones as a way to offer usage-based or pay-as-you-drive insurance.

Recommendations:
- Ensure that service and sales portals are optimized for the mobile Web, which includes elements such as look, feel, touchscreen experience and screen size.

- Evaluate usage scenarios, roles and interaction frequency to determine whether a mobile app or mobile Web is most appropriate for your enterprise.

- Deploy mobile apps for scenarios where users perform process-intensive functions, such as claims, and to improve data capture, gamification and social media integration.

7. Social and Collaboration Technologies
Social and collaborative technologies enable insurance company employees, agents and customers to fluidly share information and interact with one another using a broad range of devices. Specific technologies include social networks, blogs, wikis, video and sharing tools.

These technologies are both a threat and opportunity: They give individuals the power to rapidly share information that might negatively impact the insurer, but they have the potential to transform the relationship between the policyholder and insurer by providing close, frequent interactions.

Social media's popularity makes it critical that insurers listen to, learn from and respond to their customers and prospects. CIOs must deploy social monitoring tools that ensure compliance with company practices and procedures.

Recommendations:
- Develop social monitoring technologies that ensure customer interactions are compliant with company practices.

- Catalog customer interactions to determine how social media can be deployed most effectively.

- Establish social media sentiment analysis capabilities.

8.  Sales Force Automation and CRM Tools
These technologies are used by insurers' home offices, agents and agencies to manage customer and distribution relationships, interactions, activity, sales goals and relationship value.

Approaches to CRM enable insurers to improve campaign execution, customer segmentation and direct and one-to-one marketing in both agent and direct-to-consumer distribution models. Modern CRM solutions support and augmented and expanded single view of the customer, which includes traditional transaction data combined with new attitudinal and behavioral data.

IT investment in agent and broker technologies will rise significant in the next two years, Gartner says, as insurers focus on strengthening channel relationships. These technologies include mobility, bridges, exchanges for agent-carrier transactions, agent portals and lead management. Many agencies will not have the IT skills or infrastructure to manage new technologies and will need support from insurers' IT departments.

Recommendations:
- Deliver improved sales tools that will empower agents to build communities of customers and prospects

- Work with distribution leaders to redesign and improve existing sales tools in light of emerging trends

- Build distribution analytics that assess channel, agency and agent performance.

- Assess shifts in consumer Internet behavior to identify trends impacting marketing, sales and customer service. Ensure that channels are integrated.

9. Internet of Things
P&C insurers have already begun to leverage the benefits of the Internet of Things: fleet insurers use telematics to manage vehicle risks and driving diagnostics data, and personal lines auto insurers have adopted telematics for usage-based insurance.

Insurers will leverage real-time data from new devices embedded in appliances, equipment, homes, office, factories, vehicles and other locations to help with marketing, pricing, risk selection and claims.

Large data volumes will create big data problems: storage volumes will dramatically increase and new tools will be required to support analysis of datasets.

Recommendations:
- Evaluate the marketplace for Internet of Things technologies and their impacts on ongoing competitiveness.

- Identify partners that will assist your Internet of Things strategy.

10.  Advanced Analytics and Business Intelligence
Data must be turned into information, and information must be delivered quickly. Advanced analytics models will help executives make forecast, identify emerging data trends and determine appropriate responses.

CIOs who have successfully implemented business intelligence and advanced analytics capabilities will support decision accuracy and insight in regard to underwriting and claims efforts.

Recommendations:
- Identify  areas where users need information to support decision making.

- Assess your company's level of analytical readiness and identify hardware, software and staffing investments that will support emerging data initiatives.

- Ensure that your systems can accommodate growing volumes and a variety of data.

- Review your company's data governance guidelines.