Insurers Starting to Shift IT Spending to Digital and Data from Core

Cloud usage also poised to increase, driving up OpEx: 11th Annual Novarica Report

Boston, MA (Oct. 9, 2018) – Despite the rapid changes in technology, and the massive capital inflows to the InsureTech market, the average insurer’s overall IT spending level is not poised to change much for 2019. But within the average budget, there are signs of a shift towards digital and data away from core, according to the 11th annual Insurer IT Budgets and Projects report from research and advisory firm Novarica.

“While top-line IT spending ratios have been consistent for many years, there’s a significant amount of variation between companies,” said Matthew Josefowicz, president and CEO of Novarica, and lead author of the report for the last decade. “While many companies in the sample may be spending the same amount of money, there’s a big difference between those that are spending those dollars paying off technical debt and those that are investing for the future.”

“We’re starting to see the beginnings of two shifts in IT budgets. One is from core systems spending towards digital, data, and security, and the other is from CapEx to OpEx as more applications move towards cloud. While these are both small shifts today, we expect them to continue,” he added.

Key findings of the report include:

  • Historical norms govern budgets, with total IT spending at 3.7% of premium. IT staffing ratios are similar to those in previous years and Run/Grow/Transform spending breakdowns remain at roughly 55/25/20.
  • Life insurers are focused on digital, property/casualty insurers on analytics and speed to market. Both sectors increasingly see talent and improving IT operations as key IT challenges.
  • Core systems replacement volume is starting to wane. Projects are still common, but new replacement projects are down slightly from previous years as prior investments start to come online.

A preview of the brief is available online.

About Novarica

Novarica helps more than 100 insurers make better decisions about technology projects and strategy through retained advisory services, published research, and strategy consulting. Its knowledge base covers trends, benchmarks, best practices, case studies, and vendor solutions. Leveraging the expertise of its senior team and more than 300 CIO Research Council members, Novarica provides clients with the ability to make faster, better, more informed decisions. Its consulting services focus on vendor selection, custom benchmarking, project checkpoints, and IT strategy. For more information, visit

Source: Novarica