SINGAPORE, 20 MAY 2011-Insurance companies in the region are expected to have bigger IT budgets this year, according to a report from analyst firm IDC.
The study Business Strategy: Issues and Initiatives of Regional Insurers - A 2011 Executive Survey forecasts that IT spending among the organisations is expected to increase by 10 to 20 per cent this year compared to last year.
The survey was conducted by the Financial Insights arm to understand the business, operational, risk and technology issues that senior-level insurance practitioners are currently facing.
Results indicate that insurers will spend most on insurance-specific solutions such as distribution channel management systems or core insurance applications like policy administration, underwriting, claims, and billing.
The year will also see these organisations developing strategic roadmaps for the replacement or enhancements of legacy systems to deal with increased customer demands, as well as regulatory or tactical changes.
Tighter expense controls
Meanwhile, as a result of tighter expense controls from the global financial crisis, IDC observes that more insurance carriers are focusing their attention on creating/enabling a more flexible, dynamic IT infrastructure through the adoption of software-as-a-service (SaaS), platform-as-a service(PaaS) or service-oriented architecture (SOA) to reduce capital expenses.
"These IT delivery/consumption models resonate with insurers as they are able to break the shackles of traditional technology purchasing methods by leveraging on the concept of shared infrastructure and services, leading to lower costs, higher flexibility, and better business agility," said Li-May Chew, associate research director, IDC Financial Insights Asia/Pacific Financial Advisory Service.
When it comes to such adoption, IDC noted that Japan is blazing the trail in cloud computing within the Asian insurance space with institutions such as Sompo Japan Insurance, Sumitomo Life Insurance, and Nippon Life Insurance leading the pack, added Chew.
The report also noted that social media is slowly becoming an increasingly distinct contributor to customer outreach programmes. Chew noted that the various social media channels create a pull marketing strategy rather than the push strategy typically deployed by insurers to market their policies.
"Insurance CEOs are beginning to comprehend that the ubiquity of social media means that if they do not have an e-enablement strategy, they would likely find themselves behind the curve," she said.
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