(Image source: Shutterstock.)
As times goes on, one can discern phases in insurers’ reactions to the COVID-19 crisis. When state governments mandated social distancing, insurers’ immediate need was to enable remote work for as many of their associates as possible. Now, at least a month into “lockdown,” insurers are looking at longer-term effects of the crisis. Among these are decisions about how the business needs to respond to a market affected by pandemic, and the implications of that for IT projects and spending. As previous IIR coverage has noted, research and advisory firm Celent (Boston) has been communicating continually with its senior IT executive contacts with “snap polls.” Their most recent poll has yielded the April 20 report, “COVID-19: Impact on P&C Insurers’ IT Priorities, Budgets, and Plans (North America edition).” The study, available to Celent subscribers, provides early insights into how insurers are reconsidering shifting project and spending priorities.
Only large insurers reported a clear change in the relative importance of any of the four business goals. Specifically cost reduction and process optimization goals have become more important. (Click to enlarge.)
The Celent report is based on feedback received on April 16 from 30 respondents of senior insurance IT officers, mostly CIOs, and other senior technology officers. Celent enjoyed a strong response from officers at insurers with over $1 billion in premium, making the information gleaned representative of a larger proportion of overall IT spending in the industry, according to Donald Light, a Director in Celent’s (Boston) North America Property/Casualty Insurance Practice.
“COVID-19’s impact on the national economy, and on the P&C industry as a whole, is changing rapidly. For that reason, the data in this report is only a point-in-time snapshot of the effect of COVID-19 on North American P&C insurer’s IT budgets and plans,” Light writes in the report. “That said, this report does provide one of the first views of COVID-19’s impact on the IT plans of large, midsize, and small insurers. These views provide context and color to both insurers and technology providers as they develop and modify their responses.”
Prioritizing Cost Reduction and Process Improvement
Among the findings of the survey are that cost reduction and process improvement—both efficiency objectives—have increased in priority as an expression of how changing business goals are affecting IT plans at large insurers. Sixty-seven percent of large insurer respondents indicated that these objectives had become more important (see chart above).
The survey also found that insurers are reviewing their budgets, particularly larger and smaller organizations. Projects already underway are likely to continue as planned, but initiatives not yet begun are likely to face greater scrutiny as to when, whether and to what degree they will be undertaken.
COVID-19 Spotlights Digital, Remote and Cloud-based Insurance Solutions