- Despite pandemic-induced blows to their revenues, large insurers in leading insurance markets will inflate their tech investments between 2020 and 2024 to drive digitization.
- And we highlight three key factors that will push insurers to grow their tech spend.
- Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry. Learn more about becoming a client.
Global insurers were accelerating efforts to digitally transform their businesses in the lead-up to the pandemic, following slower progress in comparison to banking peers. But the economic downturn ushered in by the pandemic has dealt an untimely blow to insurers’ revenues, as they face large, unexpected payouts and declining premium growth.
Insider Intelligence’s recent Insurance Technology Spend Forecast report highlights how, despite this disruption, insurers in the US, UK, and Canada—strong bellwethers for global industry trends due to their total global premium volume market shares—will still grow their tech spend through 2024.
Here are three key factors that will push insurers to grow their tech spend, even as the pandemic weighs on the economy:
- Evolving and rising digital customer expectations. The preferences of incumbent insurers’ customers have profoundly shifted in recent years: They now expect a convenient, personalized experience, and policyholders are showing a rising tendency to switch providers during the pandemic. Insurers will invest in predictive analytics to develop the required capabilities to stay abreast of shifting customer expectations.
- Increasing coverage gaps. Incumbents face growing coverage gaps from several existing and emerging risks, such as cyber risk and climate change. Incumbents will need to invest in emerging technologies, such as advanced analytics, to develop the necessary capabilities to cover these proliferating risks and meet policyholder demand for comprehensive coverage.
- Core systems overhauls. Insurers will prioritize legacy IT system overhauls due to their inhibiting impact on digital transformation efforts. Insurers will therefore invest in replacing their legacy systems to unlock product and business model innovation, as well as to drive long-term cost efficiencies by lowering maintenance overheads.
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