October 23, 2012 – The areas of the enterprise where P&C insurers expect to do the most work are BI and data analytics as well as agent/customer portals; life/annuity insurers are more focused on speed-to-market and ease of doing business, according to a new report from Novarica, titled “US Insurer IT Budgets and Projects for 2013.”
The strategic goals driving IT budgets are still growth, operational effectiveness and competitive parity, while the recession and compliance pressures, which spiked last year, fell back in line this year.
“It used to be that insurers could compete on knowing more than their competitors. But what companies have to do now is out-analyze that data, out-smart the competitors in that data,” said Matthew Josefowicz, managing director and partner for Novarica, at a recent Property Casualty Insurers Association of America’s Information Technology Conference.
To do so, most insurers expect to increase IT budgets slightly in 2013. This also stems from a lack of confidence: When asked to rate their own capabilities across 16 core systems areas, insurers were only found responding confidently about four or five. IT security was the category where insurers responded most confidently about their capabilities.
More than one-third of insurers are either in the middle of a core policy administration system replacement or are planning one for 2013. While agent and customer portals and business intelligence systems are less likely to see full replacements, nearly half of insurers are planning replacements or major enhancements in these areas.
Areas where the least amount of work is anticipated are Reinsurance (where 65 percent of insurers are only interested in maintaining current systems and practices), GL/Financials (60 percent) and distribution/commissions management (50 percent).
The report also noted that deployment rates for the underlying technologies to support big data are still extremely low. However, 20-30 percent of insurers do have pilot projects underway in big data areas.
Overall, the report noted that budget trends are consistent from 2012 to 2013.
“Insurers are moving forward to develop new analytical capabilities and starting to invest more in emerging areas like mobile, social, cloud, and big data, but the bulk of IT budgets and projects for insurers in 2013 will continue to be focused on delivering badly needed business capabilities through the replacement and enhancements of core applications,” the report concludes.
This story originally appeared at Insurance Networking News.