Insurers are expected to increase the amount they invest in IT to around $101 billion in 2015 – a 4.4 per cent rise year-on-year.
Li-May Chew, associate research director and global lead for IDC Financial Insights’ Worldwide Insurance Advisory Service, predicts that new investments will focus on app development and management on such things as claims and policy administration systems, as well as data warehousing.
Chew commented: “Global insurers need to know where and how to seek pockets of growth amidst economic uncertainty.
“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.”
With the increased use of digital technology, the threat of fraud becomes more apparent. To tackle this, the report suggests that insurers will need to spend $3.3 billion in 2015 to invest information security and combat financial crimes.
However, Chew warns that insurers should not be too eager to spend when it comes to becoming more tech savvy.
“Emerging technologies are driven by an experiment and learn culture, hence failure is a distinct possibility,” added Chew.
“Insurers have to be prudent in developing a portfolio mindset for their innovation projects, be ready to write off sunk investments, and cut losses for seemingly ineffective projects.”