Chicago, Ill. (Aug. 9, 2014) – Xchanging plc, the business process, procurement and technology services provider, has released the results of a survey, entitled “The 2014 Insurance Technology and Spending Trends Report.”(1) The survey encompasses responses from 75 insurance industry practitioners conducted at the Acord Loma Forum, May 4-6, 2014.
The majority of survey respondents were representatives from the life/annuity, property & casualty and reinsurance/large commercial insurance sectors. Respondents included those at the Director/Project Manager level (26%), executive level (27%), IT staff (16%) and the rest were a mix of agents, brokers, analysts and others.
The 15-question survey was designed to explore insurance technology and spending trends, but the findings surfaced a number of opportunities and challenges for insurance professionals.
Talent Gap, Hiring Plans and BPO Engagement
According to the Bureau of Labor Statistics, nearly 50% of the industry’s workforce is above the age of 45, pointing to a shrinking talent and labor pool.
- Only 11% of survey respondents ranked attracting qualified talent as the top challenge – this is alarmingly low given the concerning future talent gap.
- About a third of individuals polled said that talent acquisition was lower on their list of priorities.
- However, nearly half (48%) of respondents had the “strategic sourcing of talent” as the second highest priority, in order to increase efficiency, cost savings and overall competitiveness.
- As 40% of respondents said their level of BPO engagement would increase. Of this, more than half (53%) said they would increase IT outsourcing and almost a third (32%) would outsource back-office services this year, including policy and claims administrative duties.
Based on this study, technology investment is the clear priority for an industry widely considered to be a relative laggard in this area.
- 67% of respondents said they expect their company’s IT budget to increase this year with 44% significantly increasing it (6-10% increase or more).
- Investment in technology was the number one priority for 60% of respondents while 86% ranked technology as the first or second priority.
- Mobility was selected by 39% of respondents as the first or second priority and claims investment came in second as the top priority with 16% of respondents.
Key Areas of Technology Investment
Perhaps not surprisingly, Big Data/analytics and mobile apps are investment priorities, but e-placing platforms will also receive attention.
- In terms of claims technologies, respondents most value predictive modeling/analytics (42%) and Big Data (25%) as focus areas.
- In fact, 36% of respondents selected Big Data/analytics to have the highest likelihood of an increased investment this year, while more than a quarter (27%) expect mobile applications to get a boost.
- Only 8% ranked cybersecurity technology as the most valued – this is interesting given the attention that is being paid to electronic insurance fraud.
- Though early in development, interest in e-placing platforms is growing with 45% of respondents saying it was a first, second or third priority. Trailblazers such as Howard Global and XL Group have already placed risk for the first time on Xchanging’s new e-placing platform last month.
New Competitive Pressure, New Customer Engagement Models
Competition in the industry is moving beyond traditional foes. In response, insurance providers are seeking to engage customers in new ways.
- While nearly half of respondents (49%) cited U.S.-based insurance companies as their biggest competition, a significant segment (30%) believe non-conventional sources will be the biggest threat.
- When asked for the biggest opportunities in 2014, 75% of respondents ranked engaging customers in new ways as a first or second priority. This most likely speaks to the tremendous interest in Big Data and mobile apps.
Actively Seeking to Work Efficiently Across Borders
Global utilities such as Xchanging’s Netsett allow companies to work efficiently and cost effectively across borders and the interest for the technology is growing.
- In fact, 30% of respondents’ companies have either already deployed a global utility or are involved in an active or planned pilot program. An additional 27% are actively evaluating how global utilities can bring value to their organizations.
“The core messages that we are taking away from this survey is that the U.S. insurance market is ready to tackle its challenges and find a new gear in terms of growth and improvement,” said Jenna Richardson, Director, North American Insurance Services, Xchanging. “We expect to see a marked investment in advanced technologies, business processing outsourcing and IT outsourcing as companies look to differentiate their businesses, combat growing competition, and increase their market share in 2014.”
To learn more, visit Xchanging.
1. In all instances of priority rankings, respondents were given multiple choices.
Xchanging provides business processing, technology and procurement services internationally for customers across multiple industries. Xchanging brings innovation, thought leadership and passion to its customers’ businesses so as to enhance performance and value. Xchanging wants to be regarded as the best provider in its chosen markets by delivering services that are recognised for outstanding quality, reliability and innovation.