Most Indian insurance companies expect to increase their IT budgets in 2016, and are expected to spend 140.8 billion rupees on IT products and services – a 9.6 percent increase over 2015, according to Gartner Inc. This forecast includes spending by insurers on internal IT (including personnel), hardware, software, external IT services and telecommunications.
“Our research shows that Indian insurers are prioritizing their technology investments for 2016 into digitalization, and particularly analytics capabilities,” said Derry Finkeldey, research director at Gartner. “They are primarily looking to digital to grow their businesses in the domestic market.”
This is driving continued strong growth in IT services, especially consulting services, and also enterprise software. Spending on IT services is forecast to reach 45.2 billion rupees, which is 32 percent of all insurance IT spending. Enterprise software spending, which includes enterprise resource planning (ERP),supply chain management (SCM), and customer relationship management (CRM), is forecast to grow 22 percent in 2016, to a total of 948 million rupees.
Earlier this year, Gartner predicted that Indian insurance companies are expected to spend 130.4 billion rupees on IT products and services in 2015. The survey also showed the top three technology priorities for Indian insurance CIOs this year are mobility, business intelligence and analytics, and digitalization/digital marketing – in that order,” Finkeldey then stated, “The big story here is around loyalty amongst agents and insurers who are taking a mobile-first strategy in their efforts to foster it.”
While new technologies are providing new revenue opportunities for insurers, there are challenges as well. Many of these companies are still unsure on the use of these technologies effectively. As a result, a recent report by Capgemini suggests that over 70 percent of insurance customers globally are do not have a positive customer experience. The study finds out a majority of these customers helped bring down overall customer experience ratings around the globe belong to Generation Y.
A survey by ACORD revealed the sector, particularly the life insurers underestimate the disruption coming from future industry conditions - as a result of which they are not prepared to respond to new threats. “Most did not feel that any particular industry trend was reshaping the industry overall, but various ones had significant and moderate impact on the business,” said the researchers.
The report suggests that a combination of big data analytics, sensor technology and communicating networks could allow insurers to anticipate risks and customer demands with far greater precision than ever before. The benefits could include not only keener pricing and sharper customer targeting, but a decisive shift in insurers’ value model from reactive claims payer to preventative risk advisors.