2023 INSURANCE PRIORITIES
The second instalment of our Mid-Market IT Priorities Report 2022/2023 sector coverage shifts the spotlight to the UK’s insurance market – which happens to be one of the world’s biggest.
Here, we explore three of the UK insurance sector’s priorities for the year ahead and take a nuanced look at what the numbers really mean. Please keep reading for the overview or learn more in our full report by clicking below.
1. BIGGER AND BETTER BUDGET ASPIRATIONS
Of the four sectors surveyed, insurance IT decision-makers were the least satisfied with IT budgets (59%).
This is far lower than the research average of 68% and likely expected, given the sector’s considerable dependency on digital transformation. Respondents also seemed tentative about their budget outlook for the year ahead. For example:
- 41% said their IT budget does not currently meet the ambitions of IT teams and what they would like to achieve
- 31% said their IT budget would need to increase significantly to meet those ambitions
- And 44% said their budget would need to increase slightly to meet ambitions – the most of all surveyed sectors
So, why do insurance IT decision makers feel challenged by their budgets? Well, for a start, insurance is a hotbed of digitalisation. From harnessing AI to reduce underwriting risk, augmenting customer service productivity with chatbots or accelerating digital product development, insurance is at the epicentre of fintech. To the extent that it even has its own term – insurtech.
Progress needs meaningful investment, and insurance IT teams might need help to stretch their current budgets across a broad portfolio of projects.
But, on the other hand, insurance IT decision-makers may be facing a defining digital transformation moment. That’s because despite being a digitalisation leader, insurance – like the broader finance sector – still wrestles with a significant volume of legacy IT.
Although steppingstone solutions like systems interoperability and API integration projects will get insurance partway there on a transformation journey, end-to-end modernisation can only be achieved by breaking ties with legacy technology.
Perhaps insurance IT leaders are looking at their 2023 budgets through this lens, and therefore, feel that more cash is required to jump the hurdle.
That said, there was a promising thread of optimism connecting our insurance respondents. 41% said they expected IT budgets to increase and plan to increase spending across IT infrastructure at a higher rate than other surveyed sectors. So, insurance could be set for another wave of exciting modernisation.
2. GROWING CONFIDENCE IN PUBLIC CLOUD
Gone are the days of tightly-regulated sectors steering clear of public cloud; that was a message sent loud and clear by our insurance IT leader respondents.
With greater security and compliance credentials and risk-reducing solutions like Node4’s Azure Hybrid Cloud, insurance IT decision-makers are embracing public cloud’s inherent agility and scalability to drive forward digital services.
This year, the insurance sector was the highest public cloud consumer (21%). However, considering it was the lowest of our four surveyed sectors (including healthcare, online retail and transport logistics) last year, it’s clear that many IT leaders feel compelled to grab the public cloud opportunity with both hands.
Although early adopters look to be powering ahead in that vein, the more cautious and less digitally mature are sticking with hybrid models for now. That said, hybrid and private cloud consumption is declining in insurance. As the wider sector modernises, the public cloud upward trend may continue. Whatever happens, we’ll be watching closely over the coming months.
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3. EXPLORING BIG-PICTURE PRIORITIES
Our Mid-Market IT Priorities Report tells a story of an insurance sector that’s moved beyond surviving and is firmly focused on thriving.
Productivity is the number one investment driver for mid-market insurance companies, with 27% of IT decision makers stating output gains as their 2023 priority. However, it’s also interesting to note that data governance (22%), data mobility (21%) and cybersecurity (16%) are evaluated as lesser priorities today – despite the data security and compliance pressures insurance faces.
That’s not to say that insurance IT decision-makers have taken their foot off the gas regarding security. Defending operations and data from devasting cyberattacks will always be of utmost importance and continued vigilance is critical. But, perhaps after heavy investment, insurance IT decision makers feel like they’ve arrived at a good place with security – where it is woven into the operational mindset and more akin to a controlled conflict than a chaotic daily battle. With ransomware and AI-generated threats predicted to evolve dramatically in 2023, we wonder if security will become a significant investment driver yet again.
In the meantime, it’s promising to see insurance filled with ambition and commercial enthusiasm, and we wish the sector a prosperous year.
Are these IT priority trends reflected in your insurance organisation?
Get in touch with a Node4 consultant to discuss scaling your IT priorities for the year ahead. Click below to arrange an initial conversation.