Insurance IT spend to hit £66bn globally, says IDC
A report from IDC Financial Insights analysts predicts that IT budgets will rise 4.4 percent from the previous year, as firms use technology to reduce costs while focusing on new initiatives around internet of things and big data analytics to boost competitiveness.
This means investments in data warehousing, claims and policy administration systems and upgrading core applications.
"Global insurers need to know where and how to seek pockets of growth amidst economic uncertainty," said Li-May Chew, CFA, associate research director at IDC Financial Insights.
"In order to regroup and focus on sustainable, profitable growth, organisations will have to confront multiple perils - ranging from reengineering or rebuilding legacy applications, to countering mounting insurance fraud - and still ensure they are well positioned to embrace growth prospects as these present themselves."
The report also claims that the rising threat of fraud related to digital technology will require a $3.3 billion (£2.2 billion) investment in information security to counter fraud, while companies will begin to see risk management as a means of generating value rather than stifling innovation.
However, it warns that as insurers invest more heavily in mobile, social, cloud and analytics technologies they must be ready to "fail fast" with new initiatives.
"Emerging technologies are driven by an experiment and learn culture and hence failure is a distinct possibility," said Chew.
"Insurers have to be prudent in developing a portfolio mindset for their innovation projects, be ready to write off sunk investments, and cut loses for seemingly ineffective projects."
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