Report: Novarica Says Insurers are Spending More on IT

By Casey Houser
Contributing Writer

Novarica released its seventh annual U.S. Insurer IT Budget and Project report this past Monday, and it revealed that players in the insurance market are spending more on IT to increase abilities to bring products to market, analyze big data, and make internal workflows more efficient.

The report surveyed 88 CIOs with insurance companies that are part of the Novarica Insurance Technology Research Council to get a feel for how much those organizations were spending. The study focused on developing an understanding of behavior within the insurance companies, and it sought to find out those companies' priorities for the coming year. Although there is apparently a move in some sectors to spend more on IT, Matthew Josefowicz, managing director of Novarica, said there is also a split between insurers that are in full support of IT and those that see IT as a "problem to be solved."

"Although most IT budget increases in 2015 will be modest, insurers are continuing to devote resources to expanding and improving capabilities," Josefowicz said. "We are starting to see a disparity between insurers who are investing heavily in their core systems and embracing the possibilities offered by emerging technology areas, and those that continue to treat IT as a problem to be solved. We believe the former group will continue to have a competitive advantage over the latter in this information industry."

As Josefowicz points out, the biggest difference here, concerning the ramifications that could follow such treatment of IT is in how companies will function in the coming years. Supporters will, as some may imagine, continue to see IT support and help their business function and adapt to new and changing technologies. Those that try to "fix" IT, on the other hand, will be left at a disadvantage because they will be less able to cope with the changing face of business overall.

The major categories in which insurance companies are investing in IT are the cloud, business intelligence, and core policy enhancements. According to the report, nearly half of all insurers have some form of cloud deployment, but there is also potential for growth because only 10 percent of business CIOs said their companies had "extensive deployments". Business Intelligence, however, is growing rapidly, and more than 50 percent of CIOs reported that their organizations were planning enhancements to data reporting, data repositories, and analytics capabilities. Lastly, the study found that almost 40 percent of insurance companies are currently implementing or plan to implement a policy administration system replacement by 2015.