Cutting costs no longer the main driver behind new technology in insurance

Firms are wanting new insurance systems to enable new capabilities not just reduce costs, a study by Novarica has claimed.

The analysts said more than a quarter of firms (27%) were now planning to increase investments in insurance IT outsourcing for application development and maintenance in 2014.  It added that 85% are already outsourcing in this area to some degree.

Matthew Josefowicz, managing director at Novarica, said: “Over the past decade, there has been an important shift in the business drivers for outsourcing. There are few pure cost reduction initiatives undertaken today. More and more of the demand centres on enabling new capabilities rather than just reducing the costs of current capabilities.”

The Novarica report on IT outsourcing claimed that many insurance firms were also looking to increase spending to improve specialised skills (34%) and also improve infrastructure (36%). Josefowicz claimed that outsourcing was now an important part of insurance CIOs arsenal and, although he advised a cautious approach, added that outsourcing could help firms meet their business goals.

“Few organisations have the ability to meet peaks in demand or to attract and support staff to meet specialised needs. In addition, many insurers find that infrastructure and commodity tasks can be done more effectively by partners,” he added.