Happy (American) Thanksgiving to all our Aite-Novarica clients, Council Members, and friends!
When I read through the newsletter items this month, they looked startlingly routine — the items one might find in any November newsletters across the past decade (minus, of course, 2020). It may not be a return to normal, but I’ll settle for a return to typical.
The annual Budgets and Projects reports (for property/casualty and life/annuity/benefits) are out, which surveys over a hundred insurer CIOs about their plans, priorities, and, of course, their budgets for the next year. We’ve been tracking average insurer IT spending as a percentage of premium since 2015, and this is the first time that number has cracked 4.0% to hit an all-time high of 4.1%. A slight (if statistically within variance) lift in IT spending feels like it meets everyone’s expectations after the last two years. So not exactly a return to normal, but a return to typical.
The other “big typical” from the Budgets and Projects report is that insurers are still largely interested in their traditional business priorities. In particular, they are emphasizing digital capabilities for distributor ease of doing business. We’ve seen a modest but lasting bump in the importance of digital and a rise in insurers prioritizing internal workflows. These changes are signs of the continuing adjustment to the new hybrid work reality and signs of the world we live in. Did anyone out there think digital was not going to become more important to the insurance industry? We’d have gotten here one way or another. If not a return to normal, it’s at least a return to typical.
If there’s one thing that we hear from insurers, it’s that human bandwidth has become a problem. Too much to do, too little time, too few people. Sure, these issues are due in part to Great Resignation and the complicated realities of hiring from a hybrid talent pool. But it’s also because insurer IT groups have so much to deliver. That’s not a new thing! CIOs have always had too much to deliver and too little time to deliver it. I don’t think I’ve ever spoken to a CIO who hasn’t looked at the five-year IT plan and wondered how to accomplish it all. If not a return to normal, it’s at least a return to typical.
I’m so thankful to have spent the last two years in an industry as resilient and focused on helping people as insurance. I’m thankful for the community that came together in virtual town halls, virtual roundtable discussions, virtual coffee talks (virtual everything!) to work together during a crisis. I’m thankful to the many people, insurers and vendors, who have shown up to share wisdom, advice, best practices, and stories and to be together when so much seemed at risk. I’m thankful to be part of an industry that knows, above all, how to deal with risk.
I know that outsiders think of the insurance industry as inflexible and slow. Insiders think of the insurance industry that way too. Yet, the last two years have proven the insurance industry is anything but. It’s important for us to hold on to the feeling of urgent change, agility in the face of outside influences, and making big IT impacts with small, visible wins as we move forward, and our priorities return to some semblance of historical norms. A return to normal isn’t on the horizon for the insurance industry, and we should all be thankful for that.
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