Although spending patterns for insurers of all sizes appear unchanged on the surface, there is some variation. OpEx vs. CapEx spending, in particular, is largely consistent with previous years, but a growing investment in cloud deployments is leading to a slight increase in OpEx spending. This reflects two shifts emerging in IT budgets: spending that was once allocated toward core systems is often being directed at digital, data, and security efforts and that more insurers are devoting resources to cloud-based solutions.
Right now, these increases may be small, but both shifts are projected to continue. 63% of insurers report plans to expand their move to cloud in 2019, as hosted deployment is viewed as more flexible than on-premise deployments—as well as potentially more secure than insurers’ existing data centers.
Cloud deployments are one of several IT operations areas being prioritized by insurer CIOs for the coming year. But improving operational issues is not without its challenges. While Agile methodology is used widely across the industry, insurers are still working to expand its impact. Enterprise architecture is becoming increasingly important to support more data-driven and digital capabilities, but it is not easy to showcase its business value and secure funding.
Other IT operations areas of interest include IT governance, which focuses on improving business and IT alignment as well as controlling costs. 30-40% of insurers report that they will be working to grow their governance capabilities in 2019. Finally, QA and testing is another area insurers are homing in on. Carriers are looking to RPA to aid in the QA process, which can cut down on the financial and goodwill costs of quality issues and rework.
To learn more about how insurance IT budgets are being spent and what projects are forthcoming for carriers, read our full report Insurer IT Budgets and Projects for 2019.
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