Xchanging plc. released its 2014 Insurance Technology andSpending Trends Report, a survey encompassing responses from 75insurance industry practitioners. The 15-question survey wasdesigned to explore insurance industry technology and spendingtends, but the findings reveal a number of opportunities andchallenges for insurance professionals.

According to the Bureau of Labor Statistics, nearly half of theindustry's workforce is age 45 or older, pointing to a shrinkingtalent and labor pool. However, only 11% of respondents rankedattracting qualified talent as a top challenge for their agencies.Approximately a third of survey respondents stated that talentacquisition is lower on their list of priorities.

Fewer than half of respondents have the “strategic sourcing oftalent” ranked as their second highest priority in order toincrease efficiency, cost savings and competitiveness.

The survey also revealed that 40% of respondents claim theirlevel of BPO engagement would increase, and more than half saidthey would increase IT outsourcing and a nearly a third wouldoutsource back-office services this year, including policy andclaims administrative duties.

When it comes technology investment, the survey results showthat technological advancement is a clear priority for the industryas a whole. Approximately 67% of respondents reported that theyexpect their company's IT budget to increase this year, and 44%cite that that they will significantly increase their budget (by 6%to 10% or more).

Technological investment was the top priority for 60% ofrespondents, while 86% ranked technology as either their first orsecond priority.

Mobility and claims investment were cited as the first or secondpriority for 39% and 16% of respondents, respectively.

In terms of technological investment, it is no surprise that BigData/analytics and mobile apps are high on the priority list, bute-placing platforms will also receive attention, resultsreveal.

Respondents most value predictive modeling/analytics and BigData as their focus areas, and 36% of respondents have selected BigData/analytics to have the highest likelihood of an increasedinvestment this year.

Contrastingly, only 8% ranked cyber security technology as themost valued, which is interesting given the attention being paid toelectronic insurance fraud.

While e-placing platforms are in the early developmental stages,interest for these platforms is growing, with 45% of respondentsciting it as a first, second or third priority.

When it comes to industry competition, the survey reveals newpressures and new customer engagement models. Insurance providersare seeking to engage their customers in new ways.

While half of survey responses cited U.S.-based insurancecompanies as their biggest competition, a significant segment ofrespondents—30%—believe non-conventional sources are the biggestthreats moving forward.

Opportunities

The biggest opportunities in 2014, according to respondents, areengaging customers in new ways as a first or second priority, whichspeaks to tremendous interest in Big Data and mobileapplications.

Insurers are also actively seeking to work across boarders.Global utilities, which allow companies to work across boarders andthe interest for technology continues to grow. Approximately 30% ofrespondents' companies plan to deploy a global utility or arealready in a pilot program, and 27% of respondents are evaluatinghow global utilities can bring value to their organizations.

“The core messages that we are taking away from thissurvey is that the U.S. insurance market is ready to tackle itschallenges and find a new gear in terms of growth and improvement,”said Jenna Richardson, director, North American Insurance Services,Xchanging.

“We expect to see a marked investment in advanced technologies,business processing outsourcing and IT outsourcing as companieslook to differentiate their businesses, combat growing competition,and increase their market share in 2014.”