Technology continues to shape the way that insurance companies do business, and a boost in efficiency keeps CIOs coming back for more. In 2014, insurers are expected to increase their amount of spending on technology, but where do they want this money to go?
Recently, Matthew Josefowicz of Novarica published a report based on a survey of 100 insurer CIO and equivalent level members of the Novarica Insurance Technology Research Council, detailing their budget plans for 2014. About 60 percent of large individual life/annuity insurers will have a higher budget than they did in 2013. Approximately 53 percent of large property/casualty insurers will increase their budget in the new year. This money is projected to go toward the continuity of existing projects, rather the integration of new technology.
Similar premiums, similar technology
The IT spending ratios do not appear to be rising substantially, and they aren’t expected to do so in 2014. For this reason, CIOs do not seem to be working toward a drastically large budget to invest in new technology. In fact, less than half of insurers claim to have big stakes in areas other than IT security, financials, claims and ratings.
Budgets are projected to be higher in 2014, but it’s important to note that many insurers are simply attempting to get up to the bar – not over it. Insurers are enhancing core policy administration systems and portals rather than replacing them altogether. Cloud deployments, mobile and social media are also growing at a slow rate.
“Growth and operational effectiveness continue to be the top strategic goals driving insurer IT budgets, with competitive parity also ranking highly,” Josefowicz writes in the report. “While the large life/annuity respondents also rated compliance highly, none of the other groups of respondents rated it as more than average importance.”
Insurers to ease into 2014
The bottom line is that CIOs will be putting more money toward technology, but no one is willing to make a large increase in the coming months. The overall goal is to sustain current systems and enhance specific pieces of technology – not to rock the boat.
Because compliance also remains at the forefront of CIOs’ minds, more people will likely be investing in software that allows them to seamlessly update their business collateral quickly and efficiently. In combination with technological upgrades, CIOs can give their companies the best chance of finding success in 2014.
