Global insurance information technology budgets will grow at a 6.5 percent compound annual growth rate (CAGR), with total IT spend reaching $109 billion by 2017, according to a new report from the analyst and consulting firm Ovum Ltd.
“Insurers are prioritizing investment that will drive customer acquisition and retention and improve operational effectiveness,” Ovum writes in an executive summary of the survey’s results. “This is a stark change from the five years of substantial IT budget cuts, which were necessitated by the global economic slowdown.”
The Ovum report forecasts the highest level of IT spending among life insurers to be in the Asia-Pacific region, with companies’ budgets expanding at an 11.6 percent CAGR to 2017, overtaking Europe as the second-largest regional market. Insurers’ IT priorities in emerging Asia-Pacific countries include the implementation of “core processing platforms” and the development of “digital channels to capture the rapid market growth.”
European life insurers, now focused on reducing operating costs, will use IT dollars to modernize legacy systems, online channels, and fraud detection systems, the report adds. Ovum expects annual IT spending in Europe to grow at a 3.9 percent CAGR — the lowest rate by geographic region worldwide — peaking at $5 billion by 2017.