IT spend in insurance expected to reach US$135bn by 2024
Despite the impact of COVID-19 on the global economy, the insurance sector is one of the largest business process optimisation technologies investors. In fact, IDC Research estimates that the IT spending in this segment will rise at a Compound Annual Growth Rate (CAGR) of 6.0% globally by 2024, reaching a market size of US$135-billion.
According to a recent IDC InfoBrief sponsored by Liferay this can be primarily attributed to the fact that 73% of the financial services industry is projected to maintain or increase IT spending compared to 2020.
The technologies that will drive this growth are related to optimisation and customer centricity. Among IT spending in the insurance sector, customer experience (CX) will have a 37% market share by 2024, rising at a CAGR of 17,5% to reach US$50-billion.
On the other hand, providing an excellent and personalised experience to new digital customers is a must for any insurer to build loyalty and long-term relationships, with 60% of insurers saying attracting and retaining customers are their top priorities, according to this new IDC InfoBrief.
As consumers continue to evolve on their digital needs and preferences, they require new ways of interacting with the brands. Today's tech-savvy customers are not just ready for self-service but prefer self-service over assisted service. The IDC study shows that 55% of insurers already have, or plan to develop a customer dedicated online portal.
Omni-channel engagement and frictionless insurance are strategic priorities related to CX that best describe what insurers expect to accomplish to achieve their digital mission. It is also necessary to prioritise key digital transformation use cases and develop a digital transformation road map to evolve to the future digital state.
The study also reveals that 60% of insurers have a plan to implement personalised communications for customers. In order to simplify and customise these experiences, insurance companies should incorporate intelligence to internal and external processes for a better understanding of the customer journey, and also, align their organisation with the corporate perspective, strategy and systems.
The increasing technological demands in the insurance sector are mainly due to the changing needs of a new digital customer looking for an anytime-anywhere insurance buying and servicing experience.
Market trends are shifting the entire business model of insurance, where advanced data analysis in real time helps to create new products on the fly and present them to customers as an added value.
Therefore, to stay relevant and remain competitive in these challenging times, insurers need to meet the experience expectations of all stakeholders by using technology such as digital experience platforms, which help unify efforts towards evolving customer-centric initiatives. The stakeholders in the insurance ecosystem include customers, employees, distributors, partners, agents/brokers, carriers and insurtech players.
In this new era, technologies and processes that businesses deploy are so tightly linked to their customers and markets that the boundary between the internal aspects of the enterprise and its external ecosystem is rapidly disappearing.