IDC Financial Insights projects that the European region continues to command the biggest slice of the IT investment pie at 40.5% of global spending, despite its pedestrian 1.7% growth as it continues to be weighed down by the eurozone crisis.
North American insurers are meanwhile expected to account for the next largest segment at 37.3% of global industry spending on a slightly higher 2% YoY growth, while the Asia/Pacific insurers would boast the most aggressive YoY technology spending, buoyed by countries in emerging Asia, such as China, India, Indonesia, and Malaysia. This is projected to rise by 8% to US$18.2 billion in 2013. On an aggregated basis, global IT investments for insurers will rise 3.1% YoY in 2013 to an estimated US$110.7 billion.
IDC Financial Insights suggests strategic investments that would add value to the bottom line include activities focused on improving the customer experience and enhancing relationships to retain and attract policyholders; investments to refine alternative delivery channels that cater to divergent buying preferences of consumers as well as augment products and services offered to independent financial advisors and agents to boost their productivity and allegiance; expansion into specialty lines insurance; and adoption of big data technologies and analytical applications.
It expects spending to center around projects such as:
– business intelligence and analytical and CRM applications for customer services and marketing;
– channel management to enhance online, mobile, and social media outreach
– core applications development and management (for claims, policy administration, and product development);
– business process management and enterprise management tools
– governance and compliance (even more so to address the growing burden of regulations)
– security risk mitigation
– financial risk management and underwriting
More such revealing findings are shared in the IDC Financial Insights report, “Global Insurance 2013 Top 10 Predictions: Key Imperatives to Thrive in This New Normal Environment” (Doc #FIN237585, December 2012), which predicts the top 10 principal macro, business, operational, and technology strategic initiatives for global insurers to thrive in the current new normal economic environment. Given the current climate of protracted slow growth and hyper-competition, they include a combination of high-level as well as specific strategic imperatives needed to remain in the game. Furthermore, with the economic malaise having driven home the need to create a more dynamic business framework via the assistance of technology, several of the business predictions are also infused with a distinct technology flavor.
“With increased volatility and complexity, the markets have fundamentally changed, and one cannot expect the future to resemble the recent past. Businesses might be hard pressed to return to the normal -business as usual- mode, and as a result, insurers will have to react by responding more quickly to both opportunities and threats, and by making efforts to identify trends and anticipate future changes,” remarks Li-May Chew, CFA, associate research director for IDC Financial Insights- Worldwide Insurance Advisory Service.
“On the macro front, we see the faltering global expansion and low interest rate environment reducing investment yields and undermining profitability. This is driving international insurers to expand into emerging Asia and Latin America to support profitable growth and revisit alternative revenue streams from specialty lines such as microinsurance and takaful insurance. There will also be more concerted efforts around online modes such as the Internet, with forays into social media and mobile initiatives.”
“The crisis further instigated a thorough regulatory review, and we expect more onerous regimes like Solvency II and FATCA inevitably leading to higher compliance costs. Nonetheless, despite the somewhat lackluster economic environment, we predict aggregated insurance technology spending rising 3.1% in 2013, with investments focused around process and enterprise management tools, analytics and CRM, channel management, core applications, and compliance and risk management.”
Table 1 presents five of IDC Financial Insights- 10 global insurance predictions for 2013. This list is consolidated from the latest research and internal brainstorming sessions among IDC Financial Insights- regional insurance analysts as well as from perspectives gleaned via interactions with insurers and technology vendors across this globe through the course of the past 12 months.
Source: IDC Financial Insights, 2012
“Albeit the insurance industry may be the most traditional sector within the financial services space, there is still no escaping the need to continually reinvent itself to capture and exploit new growth opportunities. For instance, this could mean pursuing innovative technologies around specific areas like social media and telematical applications. Successes in technological investments can also be enhanced if the IT teams gather continual feedback and buy-in from business divisions, and actively manage their vendor relationships to ensure maximum value from these engagements” concludes Li-May.
For more information about this report, “Global Insurance 2013 Top 10 Predictions: Key Imperatives to Thrive in This New Normal Environment” (Doc #FIN237585, December 2012), please contact Madhura Moulik at +91 80 6699 1090 or mmoulik@idc.com.
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