5 Key Findings from Celent's Insurance CIO Survey

The research firm finds IT budgets increasing and one technology getting a lot of attention.

Celent released findings from its 2013 North American Insurance CIO survey today, which analyzes responses from 24 insurance CIOs across all lines, but mostly P&C. Here are some trends that emerged from the report, which was written by analysts Chuck Johnston and Donald Light:

IT Budgets Are Rising Nicely... On average, insurance technologists can expect a 6.3% increase in their budget this year, which Celent says is a "robust increase, somewhat greater than other surveys have reported." Only 15% reported that their budgets would stay flat or drop.
...But That's Mostly Going to Maintenance. Most respondents said that the percentage of their total IT budget devoted to "R&D and pilot projects" is in the 1%-5% range.
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Policy Admin Still By Far The Highest Priority.... According to respondents, one-fifth of IT resources go into policy administration, and all respondents -- yes, 100% -- reported plans to make changes to the system. These include incremental changes to the existing system, rewriting using modern code, wrapping or extending, replacing with a packaged system or consolidating mutiple systems.
...But Underwriting Is Gaining Traction. Forty percent of respondents plan to wrap or extend their underwriting system. "This is likely driven by a need for greater flexibility and automation, and is enabled by the increasing use of rules and workflow/BPM systems," Celent writes. "Surveyed carriers were very focused on underwriting and new business improvement and customer experience as areas of opportunity for innovative thinking."
Insurers Are Still Learning Innovation. While "Innovation is a focus for many insurers as they seek new ways to drive growth and remain competitive," Celent writes, "even the most optimistic insurers interviewed see much more limited potential for game-changing innovation than there is in other industries." Celent also believes that insurers confuse "the use of emerging technologies to enable process/cost improvement with true business innovation supported by emerging technology where a qualitative change to the business occurs. This leads to "fun" and relatively safe projects with relatively little impact on competitive stance."
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Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio