The technology analyst said, while cost reduction was an important factor driving this process, the need for increased operational flexibility and efficiency were the primary objectives in the modernisation of insurance systems. It added that this would drive global spending on core policy administration software – this will reach $3.7bn by 2017.
Charles Juniper, Ovum senior analyst for financial services technology, said: “Having the organisational flexibility to introduce new products quickly, redesign processes, or rapidly enter new geographies or market sectors is seen as a critical capability by P&C insurers. Having a core processing platform that underpins this flexibility is increasingly seen as a crucial foundation to achieving this.
“Many of the current generation of P&C policy administration platforms provide insurers with increasing levels of flexibility and the means to migrate from legacy systems in a modular fashion. Ovum believes that some leading platform offerings are getting close to delivering the flexibility and functionality demanded by P&C insurers.”
The report also said that CIOs in general see increasing operational flexibility and efficiency as their key objective (40%), followed by cost cutting (26%), increasing revenues (13%) and improving the customer experience (11%).