October 6, 2011 – IT budgets will be on the rise across nearly the entire insurance industry landscape, according to a new report from Novarica.
This seems to result from a poignantly honest view of internal operations, as on average, insurers rated nearly half of their systems as below “acceptable” standards — particularly in the areas of consumer portals and customer relationship management (CRM).
The study, intended to serve as an IT forecast for next year, dives into motivating factors and IT to-do lists of insurers of all shapes and sizes. Novarica’s study, “US Insurer IT Budgets and Projects for 2012,” surveyed 132 insurance CIOs and senior IT executives in the month of September. The pool represents a broad cross-section of U.S. property/casualty and life/annuity insurers, and breaks down results by size and industry.
When citing top 2012 projects (including both replacements and enhancements), policy administration is easily the most ubiquitous choice; 40 percent or more of large and midsize P&C and large life/annuity insurers selected it as well as a large majority of mid/small life/annuity companies. Small P&C insurers were an exception, giving slight precedence to claims and business intelligence (BI) projects.
Despite the hype, absent from mention in the report, except as a footnote, are mobile, tablet, social media and cloud platforms — fewer than 15 percent of participating insurers cite any of these as a top three priority. Less than 10 percent of insurers have deployed any of these areas, with the most common being software-as-a-service and social media marketing.
When asked for a top IT priority heading into next year, a bit more of a break in sectors is noticable, as life/annuity insurers of all sizes strongly emphasized “speed to market for true-new products.” While this category ranked highest overall, P&C insurers also displayed emphasis on “distributor ease of doing business.” Additionally, rated highly among all participants were “customer ease of doing business” and BI. Novarica, using the same categories, also asked participants to list their top three IT priorities for 2012; cited most often was BI/data analytics, followed by “reduced operating expenses” and “speed to market for true-new products.”
Interestingly, given a recent report claiming “three-fourths of data center information managers say the business side is oblivious to their company’s security preparedness,” IT Security rated highest across the range of insurers in self-assessments of capabilities, meaning companies are most confident in this area. Little confidence, on the other hand, is admittedly placed in customer portals and CRM, particularly small P&C and mid-level life/annuity with respect to the former, and large P&C with respect to the latter.
The top three contributing factors to these 2012 IT plans were cited as growth strategies, operational effectiveness and competitive parity. The economic recession and compliance issues, despite headlines, ranked fifth and sixth, respectively, out of nine.
This story originally appeared in Insurance Networking News.