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February 27 2015 | Deb Smallwood

This year is shaping up to be a pivotal year for insurer technology plans. SMA has now released a series of three research reports that provide a picture of the transformation underway and the vital role of technology. 2015 Strategic Investments: Making sense of the shifts evaluates industry trends over a six year period and identifies significant changes in why and how insurers are investing in technology. The report assists insurers and solution providers in understanding the implications of these shifts, and then provides a framework from which to evaluate their companies’ strategies in the context of the marketplace trends. SMA Top 10 Imperatives for Insurers – 2015, articulates the key areas that insurers should have at the top of their minds as they chart a course for the months and years ahead – the imperative actions that are needed to link strategy to business capabilities to technology investments. Our newest report, 2015 Insurance Technology Spending and Priorities, completes the picture by identifying specific projects for P&C personal lines, P&C commercial lines, and Life & Annuity companies. The project priorities and the magnitude of the projects are identified for key areas of the business. The business and technology projects identified in the report align to the Top 10 Imperatives and the strategic shifts in investments.

So what’s the net of all this? What have we learned as we conduct research and advise/consult with insurers on their strategies and plans? The overarching themes are that insurers are responding to rapid changes in the marketplace by focusing on customer/agent expectations, executing on strategies to become digital insurers, and harnessing innovation to rethink and reimagine their businesses. Most insurers recognize that this is a journey, requiring sustained investment, resources, and C-level vision.

Most insurers recognize that this is a journey, requiring sustained investment, resources, and C-level vision.

Overall, insurer IT spending for 2015 is on track to increase almost 5% over spending in 2014, reflecting more aggressive positioning for the digital age. Spending on specific business application projects varies significantly by line of business, reflecting different stages in the transformation journey. The top business application projects are insured portals, agent/producer portals, rating engines, and core system replacements, while the top tech projects are related to mobile and BI/analytics. These investments are aimed at improving the customer/agent experience; providing a flexible, agile foundation for change; and gaining more insights into customers, risks, and operations.

Our expectation is that these trends will continue and even accelerate as insurers battle for customer and share in the digital age. There is clearly a bifurcation of the industry underway, with the gap between leaders and laggards expected to continue to get even wider. The major replacement, modernization, and enhancement projects in progress at insurers are making a significant contribution to industry transformation and will separate the winners from the losers.

For more information on insurer’s technology plans, read SMA’s new research report, 2015 Insurance Technology Priorities and Spending.Contact Deb Smallwood for further information at dsmallwood@strategymeetsaction.com

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To learn more, please contact:
Deb Smallwood
Senior Partner
Strategy Meets Action