Novarica: Insurers to Increase IT investment in Mobile, Big Data
Robert Regis Hyle | October 01, 2015
The pace of change in the insurance industry is accelerating, and insurer IT budgets are starting to shift priorities. While the bulk of technology spending in the industry is focused on addressing legacy system challenges, new areas like mobile and big data are attracting more investment than in prior years, according to Novarica's 8th annual study of U.S. insurer IT budgets and projects.
“I think the increased deployment in mobile and big data is interesting,” says Matthew Josefowicz, president and CEO of Novarica. "While spending ratios are staying within historical norms, we are seeing more spending go towards transformation. With a heavy focus on core system replacement and new capabilities like digital and analytics, the industry is slowly but surely moving itself forward."
Josefowicz is worried that the percentage of premium dedicated to IT budgets has not increased in six years. “With all the changes going on in technology, I believe the industry has been missing out on some great opportunities.”
Key findings of the report include:
- Estimated spending on digital and data combined equals estimated core systems spending. IT security, while a major concern, absorbs much less budget than any of these areas.
- Top challenges for CIOs include improving IT operations; attracting, retaining, and managing talent; and dealing with resource constraints in the face of high demand for new capabilities.
- Core policy administration replacement is on the agenda for more than one-third of insurers in the sample, but activity levels vary by size and sector. Portals and BI/Analytics are due for significant enhancements at nearly half of insurers across all sizes and sectors. Replacement rates for BI platforms are growing, especially among larger insurers.
- SaaS/Cloud is now mainstream, especially for non-core applications. SaaS/Cloud for core insurance applications is poised to grow in 2016, with 15 percent of insurers planning to launch or pilot new systems.
- Mobile deployment rates among insurers are poised to nearly double in 2016.
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