If faced with the opportunity to spend an extra $3 to $5 million in their IT budget, new research from Novarica shows most insurance CIOs would spend the money on data and analytics, despite the already heavy investment in that area.
Mobile technology was also cited as an area in which CIOs are eager to invest, while many smaller insurers would use the substantial budget increase for full core systems replacements.
"The survey stemmed from one of our insurer advisory clients, who posed this question to us," says Novarica partner and managing director Matthew Josefowicz. "With the Novarica Insurance Technology Research Council at our disposal, we felt it would be enlightening throw the question open to the group."
The research council has over 300 members and serves as a knowledge-sharing and peer-networking community of insurer technology senior executives.
The question received answers from over 120 insurer CIO and senior IT executive members, who came from property & casualty insurers under $1 billion and over $1 billion, and life/annuity insurers under $1 billion and over $1 billion.
For the larger insurers, $3-5 million is a nice bump for their research and development budgets; for midsize and smaller insurers, the amount could mean a 25 percent to a 100 percent budget increase, according to Josefowicz. As a result, the findings provide insight into which demands for technological improvement remain unmet and will likely remain unmet in 2013.
Over 30 percent of insurer CIOs would spend more on data and analytics capabilities, despite the already intense focus on this area. Insurers under $1 billion in annual premium have a huge backlog of demand for core systems projects, suggesting that if business conditions improve and budgets can be made available, the industry can expect continued high volumes of activity in this area.
IT capabilities and infrastructure were other popular wish list items for large and small insurers, and one in five insurers cited an investment in mobile capabilities as a means to improve customer and agent and experience.
A lack of financial resources was not the only barrier insurers cited, however. Said one respondent, "No matter how much more money we had, the organization could not support the delivery of any more services. The capacity for the business support of IT projects is all but tapped out at this point."
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