IDC Financial Insights reveals that global insurers will increase IT spending to almost US$101 billion in 2015, a Year-on-Year (YoY) increase of 4.4% compared to 2014, with rigorous investments in technologies to boost efficiencies and innovation.
Li-May Chew, CFA, associate research director, and global lead for IDC Financial Insights’ Worldwide Insurance Advisory Service, sees investments centering around new core applications development and management such as data warehousing, claims and policy administration systems. These replacements or refreshes are required as legacy IT systems become increasingly complex, inflexible, and archaic, to the point of negatively affecting technology integration and interoperability.
Insurers are further spending on change transformation and business optimization initiatives to augment productivity and support intermediaries, as well as in knowledge management, business analytics and customer relationship management applications to improve underwriting insights, raise customer centricity and intimacy. Also critical is the need to enhance not just the intermediated distribution channels comprised of insurance agents, brokers and bancassurance, but also newer, disintermediated digital portals of the Internet, social platforms and mobile delivery.
“We expect the global insurance industry to invest more rigorously in technologies, and project global IT investments rising to almost US$101 billion this year as these support campaigns to boost efficiencies and innovation. Geographically, the emerging markets continue to shine. While cumulated spending for these nations may still be a comparatively smaller US$19 billion, this will rise at a 3-year CAGR of 6.7% between 2015 to 2018, which is double that of mature nations,” says Chew.
She expects the 3-year CAGR in mature nations to be 3.1% and globally to be 3.8%.
IDC Financial Insights sees especially noteworthy IT developments within the insurance sectors of the Big Five BRICS economies (of Brazil, Russia, India, China, and South Africa); Chile, Colombia, Mexico, and Argentina in LATAM; and the Southeast Asian countries such as Thailand, Indonesia, Malaysia, and the Philippines.