Xchanging plc. released its 2014 Insurance Technology and Spending Trends Report, a survey encompassing responses from 75 insurance industry practitioners. The 15-question survey was designed to explore insurance industry technology and spending tends, but the findings reveal a number of opportunities and challenges for insurance professionals.

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

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

The survey also revealed that 40% of respondents claim their level of BPO engagement would increase, and more than half said they would increase IT outsourcing and a nearly a third would outsource back-office services this year, including policy and claims administrative duties.

When it comes technology investment, the survey results show that technological advancement is a clear priority for the industry as a whole. Approximately 67% of respondents reported that they expect 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% of respondents, while 86% ranked technology as either their first or second priority.

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

In terms of technological investment, it is no surprise that Big Data/analytics and mobile apps are high on the priority list, but e-placing platforms will also receive attention, results reveal.

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

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

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

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

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

Opportunities

The biggest opportunities in 2014, according to respondents, are engaging customers in new ways as a first or second priority, which speaks to tremendous interest in Big Data and mobile applications.

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

“The core messages that we are taking away from this survey is that the U.S. insurance market is ready to tackle its challenges 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 companies look to differentiate their businesses, combat growing competition, and increase their market share in 2014.”

Special Reports /

67% expect IT budgets to increase, top priorities mobile and claims investments

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