Singapore and Hong Kong, December 16, 2013 – As global economies continue to mend gradually and insurance markets harden, IDC Financial Insights projects technology spending of Asian insurers rising in tandem.
Amongst others, IDC Financial Insights sees the necessity to – enhance operational flexibility and optimize on business process; innovate in product development and pricing; improve speed to market to stay competitive and dynamic; and keep pace with innovation and social phenomena in redesigning customer engagement strategies – leading to an intensified reliance on technology to achieve these goals. It projects global technology investments rising to US$101.6 billion in 2014, based on a 4.0% compound annual growth rate (CAGR) over the forecast period of up to 2017.
“At the end of the day, as tighter coupling of technology with day-to-day businesses and operations sees IT becoming more intrinsic to an organization, budgets for technological deployments by insurers would need to rise,” explains Li-May Chew, CFA, associate research director for IDC Financial Insights’ Worldwide Insurance Advisory Service.
“Herein, the star performer continues to be the Asia/Pacific region, with an anticipated 5.6% rise in technology investments to US$18.1 billion in 2014, buoyed by countries in emerging Asia, such as China, India, Indonesia, and Malaysia.”
“Our industry conversations in Asia/Pacific indicate that the top three most frequent areas of spending centers are around e-channel strategies for online, mobile, and possibly also social media; core applications development and management – for instance, for claims, policy administration, and product development; and for business analytics and CRM applications,” remarks Chew.
“It is reassuring to note that Asian insurers increasingly comprehend that business-as-usual will no longer suffice and they need to transform to remain relevant to the game. Insurers are thus becoming more generous in allocating resources into technology, and this is resulting in investments around core applications as they replace installations that are reaching obsolescence, spend to expand their network of operations, or provide technology support as they enter into new markets or form collaborations with domestic incumbents.”
More such revealing findings are shared in IDC Financial Insights‘ report “Global Insurance 2014 Top 10 Predictions: Future-Proofing the Business” (Doc #FIN244346, December 2013) on key insurance trends that are unfurling for the new year. This was written to assist insurers with the task of future-proofing their businesses, and to allow financial technology vendors to more effectively prioritize their development activities and reposition offerings to ensure synergistic partnerships with these customers.
“We see insurance market leaders increasingly snapping out from years of conventionalism and inertia to future-proof operations,” comments Chew.
“Getting their organizations future-ready mean needing to reinvent and simplify business processes to dramatically reduce cost; optimize on customer experiences with the assistance of analytics; enhance the digital outreach; play a more active role in risk modeling and assessment; and explore disruptive innovation within the mature markets such as Australia, Singapore, Hong Kong, Taiwan and South Korea.”
Table 1 presents IDC Financial Insights’ ten global insurance predictions for 2014. This list was consolidated from the latest research and internal brainstorming sessions among IDC Financial Insights’ regional insurance analysts as well as from perspectives gleaned via interactions with insurers and technology vendors across this globe through the course of the past 12 months.
Table 1: 10 Predictions for Global Insurance, 2014
|1||Countries will revive interest rates as global economies mend, but benefits are not instantaneous and life insurers will need to reevaluate immediate growth strategies|
|2||Multinationals will be lured by aggressive growth in the emerging markets of developing Asia and Latin America|
|3||Aggregated insurance technology spend will increase by 4% in 2014, with the star performer being Asia/Pacific with 5.6% growth|
|4||Modes for delivering core systems will be increasingly diverse but most transformational projects will still be conducted on an incremental basis|
|5||Increasing complexities in operating models will drive insurers to simplify business processes to reduce cost|
|6||The need to implement a total customer relationship will drive requirements for advanced analytical techniques|
|7||Insurers will not be hamstrung by existing distribution channels and continue to enhance digital outreach capabilities|
|8||Managements will be more active in risk modeling and assessment, focusing on enterprise risk management and handling enhanced regulatory requirements|
|9||Progressive insurers will explore disruptive innovation from State-of-the-Art technologies such as telematics|
|10||At up to 15% of premiums, fraudulent activities will have fraud management kicking into even higher gear|
Source: IDC Financial Insights, 2013
About IDC’s Predictions
IDC’s annual Predictions in APEJ draws upon the latest IDC research and a worldwide brainstorming exercise among IDC’s 1000+ analysts. This was followed by an extensive regional review to weigh in on key industry events, user trends, vendor strategies and economic measures that promises to uniquely define the technology trends that would impact and drive the market in APEJ for 2014. Across the globe, following the release of IDC’s global top ten predictions, IDC’s geographic, technology and industry teams will be releasing their own specific predictions in the coming months.
About IDC Financial Insights
IDC Financial Insights assists financial service businesses and IT leaders, as well as the suppliers who serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of industry experience, our global research analyzes and advises on business and technology issues facing the banking, insurance, and securities and investments industries. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world’s leading technology, media, research, and events company. For more information, please visit www.idc-fi.com, email firstname.lastname@example.org, or call 508-620-5533. Visit the IDC Financial Insights Community at http://idc-insights-community.com/financial.
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