A recent report from SMA found significant growth in insurance IT budgets for 2014 through 2017. The study reveals business drivers for IT spending, how technology budgets are changing, and top priorities for the next four years.
In 4Q13, SMA surveyed 100 insurance executives in the P&C and L&A segments. Respondents indicated optimism towards the improving market and plans to increase their IT investments. Thirty-two percent consider their company to be in "transformation mode," largely enabled by IT programs.
[ More on IT: Why an IT Service Management Approach is Crucial. ]
Technology spending proved to be considered critical to business' growth and change. Almost two-thirds of insurers plan to increase 2014 IT budgets by an average of 3%, according to SMA. 11% of respondents said they plan 2014 increases of over 10%. All indicate plans for continuous budget increases through 2017.
Insurers surveyed by SMA plan to use larger budgets for major projects that will improve customer experience, modernize core systems, and gain further analytical insight. P&C insurers reportedly intend to focus more on analytics and mobile. L&A companies plan to heavily invest in upgrading business and underwriting capabilities, according to SMA.
The report indicates that insurers' IT spending is becoming increasingly strategic. "Forward thinking insurers are beginning to define the destination – what it will look like to be a next generation insurer 5 or 10 years from now," the report states. "This enables insurers to invest in the context of a strategic framework, focusing on key imperatives that will make the biggest impact in 2014."