Asian insurers are expected to spend US$18.1 billion in 2014 on technology investments, an increase of almost 6 percent as compared to this year, according to IDC Financial Insights.
The increased technology spending is in an effort of future-proofing their organisations, said Li-May Chew, CFA, associate research director for IDC Financial Insights' Worldwide Insurance Advisory Service.
To be future-ready means that Asian insurers have to "reinvent and simplify business processes to dramatically reduce cost, as well as enhance the digital outreach," remarked Chew. Asian insurers are thus found to be investing more in core applications development and management - such as for claims, policy administration, and product development - as well as in e-channel strategies for online, mobile, and possibly also social media .
Chew added that Asian insurers also need to "optimise on customer experiences with the assistance of analytics, and play a more active role in risk modeling and assessment" to future-proof their business. Due to this need, Asian insurers are increasing their investments in business analytics and CRM applications.
The following are IDC Financial Insights' 10 global insurance predictions for 2014. They are based on research and internal brainstorming sessions among IDC Financial Insights' regional insurance analysts as well as from perspectives gleaned via interactions with insurers and technology vendors across this globe in 2013.
1. As global economies improve, interest rates will be revived. However, this does not guarantee instantaneous benefits. Life insurers thus need to reevaluate immediate growth strategies.
2. Multinational are expected to be drawn by the aggressive growth in emerging markets of developing Asia and Latin America.
3. The technology spending of Asian insurers is expected to increase by 5.6 percent.
4. Modes for delivering core systems will be increasingly diverse but most transformational projects will still be conducted on an incremental basis.
5. Insurers will see the need to simplify their business processes in an effort to reduce cost due to increasing complexities in operating models.
6. The requirements for advanced analytical techniques are expected to be driven by the need to implement a total customer relationship.
7. Insurers will not be hamstrung by existing distribution channels and continue to enhance digital outreach capabilities.
8. Managements will place more focus on risk modeling and assessment, especially enterprise risk management and handling enhanced regulatory requirements.
9. Progressive insurers will explore disruptive innovation from State-of-the-Art technologies such as telematics.
10. Fraud management is expected to improve due to the increase in fraudulent activities.