Quoting, analytics technology top priorities for Canadian insurance industry in 2015

Technology, particularly to enhance underwriting, was ranked as the highest priority for 2015 by nearly half of Canadian insurance industry respondents in a recent survey, and most said their IT spend would increase next year.

In the survey of insurance industry professionals, conducted in October and November online by technology provider Xchanging plc, 49% of respondents said technology was their biggest priority from a resource perspective, followed by underwriting at 23%.

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Most respondents (83%) were from the property and casualty industry, with the remainder working in life and annuity, reinsurance and multi-line.

Underwriting was also a priority for the technology itself, with 31% naming quoting/underwriting portals as the top priority, followed by big data/analytics technology by 28% and mobile apps by 20%.

“Nearly as many respondents said that quoting and underwriting portals were well understood and widely deployed (27%) as said their companies did not think they applied to their business (23%),” Xchanging noted.

However, 18% said their companies are still trying to understand the value, and 19% said they have a pilot underway or planned.

Predictive modeling and analytics was also considered the most valued claims-related technology by 54% of respondents.

However, only 14% named cyber security as the most valued technology. “This is surprising given the October 2013 Cyber Security Self-Assessment Guidance which was made applicable to all financial institutions in Canada due to the increases in sophisticated cyber attacks,” Xchanging noted.

Modernization of core technology infrastructure and increased competition were both seen as top challenges by 23% of respondents each, followed by developing innovative products and services.

Increasing market share was the top goal among 41% of respondents, followed by reaching customers in new ways and through multiple platforms (such as mobile apps) by 23%. Interesting, less than 1% chose breaking into new insurance markets as a top business goal for the coming year.

In terms of IT spending, 65% of respondents said it will increase, with 18% suggesting they will do so by more than 10%. Only 3% said IT spending would decrease by any amount next year.

When asked about competition in 2015, 42% cited local insurance companies and non-conventional insurance sources (such as banks and Google) as the largest threats, with only 11% naming foreign-backed insurance companies as a concern.

“With approximately $46 billion in direct premiums written, it’s clear that the Canadian market is growing exponentially,” Sean Allen, vice president of sales at Xchanging Insurance Services, North America noted in a statement on the survey results.

“It’s encouraging to see the market making a concerted and dedicated effort toward investing in modernizing its technological infrastructure to better serve its growing customer base, capitalize on growth opportunities and ward off rising competition.”