Despite overall insurance IT spending levels remaining consistent on average, individual companies’ IT spending ratios span a wide range. About half of insurers report having a flat IT budget going into 2019, consistent with 2018. But 30% of insurers expect to see an increased IT budget next year, while 20% will most likely be working with a decrease.
The largest portion of IT spending is being devoted to staff and services. About 40% of a typical insurance IT budget is spent on internal staff. Larger insurers are spending more on additional, external staff and services. Similar to last year, around 30% of insurers intend to increase blended staffing efforts. Few insurers of any size, however, are planning to change their spending on ADM outsourcing.
No dramatic shifts in hardware or software maintenance fees are expected in 2019. They are likely to remain 22% of budgets on average, which is more than double the 10% that is allocated to new purchase budgets. Overall, IT spending is beginning to move away from core efforts and toward digital, data, and security initiatives.
Core systems projects still come with large price tags, so the shift in spending is slow. But as digital engagement, analytics, and security needs continue to grow in importance, carriers will direct more resources their way. To learn more about how insurance IT budgets will be spent in 2019, read the full Insurer IT Budgets and Projects report.
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