Nearly two-thirds of respondents plan to increase spending on technology in 2015, survey finds
Chicago, Ill. (Nov. 21, 2014) – Xchanging plc, the business process, procurement and technology services provider, has released the results of an industry survey(1) it recently undertook in partnership with Insurance-Canada.ca. The survey was designed to gauge the overall health of the Canadian insurance market, as well as companies’ planned investments, business priorities and growth strategies for 2015.
Responses were sourced in October and November 2014 via Insurance-Canada.ca’s newsletter subscriber base and relevant Canadian insurance LinkedIn communities, with 83 percent of respondents from the property & casualty industry, and the remainder working in life and annuity, reinsurance and multi-line.(2)
As the commercial insurance industry consolidates and the competitive and customer landscape shifts, survey results suggest that insurers understand the need to invest in data-driven resources and technologies.
- When asked for the biggest priority from a resource standpoint, technology was selected by 49 percent of respondents, which was more than double the next highest category (underwriting, cited by 23 percent), making it the clear top priority.
- When asked about specific technology categories that would receive more investment in 2015, respondents further underscored the importance of underwriting, with 31 percent quoting/underwriting portals as the top priority, followed by Big Data/analytics (28 percent) and mobile applications (20 percent).
- When asked about their companies’ most valued claims-related technologies, more than half (54 percent) cited predictive modeling/analytics.
- Only 14 percent of respondents said cyber security solutions were the most valued technology. This is surprising given the October 2013 Cyber Security Self-Assessment Guidance which was made applicable to all financial institutions in Canada due to the increases in sophisticated cyber attacks.
Top Business Challenges and Goals
The results show that the top business challenges and goals mirror one another, primarily around besting competition to increase market share and using technology to better reach customers.
- When asked about the top three challenges of 2015, modernization of core technology infrastructure (23 percent), increased competition (23 percent), and developing innovative products and services (20 percent) were cited most.
- Increasing market share (41 percent) and reaching customers in new ways and through multiple platforms (23 percent) were cited as the top two business goals, affirming the value placed on technologies like mobile applications.
- Surprisingly, breaking into new insurance markets was ranked as the least important goal with less than one percent choosing it as the top business goal.
IT Budget and BPO Spend
Based on this survey, 2015 promises to be a healthy year in terms of overall IT spending and BPO investment.
- 65 percent will increase IT spending, with 18 percent saying they will do so by more than 10 percent.
- Nearly 40 percent say their company’s level of BPO engagement will increase, primarily in IT and back-office services.
- Only three percent said IT spending would decrease by any margin in 2015.
The survey results make clear that Canadian insurance market participants are most worried about home-grown competition and non-traditional sources of competition.
- When asked who would be their biggest competitors in 2015, respondents indicated by a wide margin (42 percent) that local insurance companies and non-conventional insurance sources (i.e. banks and Google) pose the biggest threat to their businesses.
- Only 11 percent cited foreign-backed insurance companies as the biggest threat.
Implementation of Quoting and Underwriting Portals
The survey identified mixed views from insurers on their current usage and future plans for quoting and underwriting portals, which is interesting given they were highly rated in terms of overall investment.(3)
- Nearly as many respondents said that quoting and underwriting portals were well understood and widely deployed (27 percent) as said their companies did not think they applied to their business (23 percent).
- However, 18 percent of respondents said their companies are still trying to understand the value, and 19 percent have a pilot underway or planned, suggesting a desire to further explore how the technology can add value.
“With approximately $46 billion in direct premiums written, it’s clear that the Canadian market is growing exponentially,” said Sean Allen, Vice President of Sales, Xchanging Insurance Services, North America. “It’s encouraging to see the market making a concerted and dedicated effort toward investing in modernizing its technological infrastructure to better serve its growing customer base, capitalize on growth opportunities and ward off rising competition.”
To learn more, visit www.xchanging.com/us/insurance-services.
1. Note: In all instances of priority rankings, respondents were given multiple choices.
2. In total, 88 responses were collected, of which 30 percent were from the C-suite, and nearly half at director level or above.
Xchanging provides business processing, technology and procurement services internationally for customers across multiple industries. What we do: Xchanging brings innovation, thought leadership and passion to its customers’ businesses so as to enhance performance and value. What we want to be: 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.