Results from the 2014 Canadian Insurance Technology Spending & Trends Report are in, and insurers painted a clear picture as to where their investment priorities will be for the coming year.
“When we look at the data from the Canadian survey and the United States survey we conducted in May, we actually see a lot of similarity in terms of key business challenges, goals and opportunities,” says Sean Allen, Vice President of Sales, Xchanging Insurance Services, North America. “For example, both countries ranked modernization of core technology, increased competition and the development of innovative products and services to be the top challenges, reported marked increases in IT budget and business process outsourcing.”
Results were similar for U.S. and Canadian respondents who underscored the value of technologies such as Big Data, predictive analytics and mobile applications, says Allen, and reported competition from local insurance companies and non-traditional sources such as Google and banks to be troublesome.
Some of the highlights of the survey include:
- When asked for the biggest priority from a resource standpoint, technology was selected by 49 percent of respondents, which was more than double the next highest category (underwriting, cited by 23 percent), making it the clear top priority.
- When asked about specific technology categories that would receive more investment in 2015, respondents further underscored the importance of underwriting, with 31 percent quoting/underwriting portals as the top priority, followed by Big Data/analytics (28 percent) and mobile applications (20 percent).
“However, the Canadian market uniquely reported an interest in and demand for implementing quoting and underwriting portals,” Allen told
Insurance Business. “According to the data, 31 percent of respondents chose the technology as the top priority to receive greater investment next year and nearly half of respondents either report having these portals already widely deployed in their businesses or have a pilot planned or underway.” (continued.)
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Other highlights include:
- When asked about their companies' most valued claims-related technologies, more than half (54 percent) cited predictive modeling/analytics.
- Only 14 percent of respondents said cyber security solutions were the most valued technology. This is surprising given the October 2013 Cyber Security Self-Assessment Guidance which was made applicable to all financial institutions in Canada due to the increases in sophisticated cyber attacks.
- When asked about the top three challenges of 2015, modernization of core technology infrastructure (23 percent), increased competition (23 percent), and developing innovative products and services (20 percent) were cited most.
- Increasing market share (41 percent) and reaching customers in new ways and through multiple platforms (23 percent) were cited as the top two business goals, affirming the value placed on technologies like mobile applications.
Surprisingly, breaking into new insurance markets was ranked as the least important goal with less than one percent choosing it as the top business goal.
“It's encouraging to see the Canadian insurance market embracing technologies that drive greater efficiencies in the way we do business and encouraging faster communication between brokers and carriers to provide higher levels of customer service,” said Allen. “This will continue to be important as we see the market take on new forms of competition in 2015 and beyond.”
Responses were sourced in October and November 2014 via a newsletter subscriber base of more than 4,500 and relevant Canadian insurance LinkedIn communities, with 83 percent of respondents from the property and casualty industry, and the remainder working in life and annuity, reinsurance and multi-line.
