New Delhi/Singapore, – IT spending by the insurance industry in Asia Pacific (excluding Japan) is estimated to grow from US$3.2 billion in 2007 to reach US$5 billion in 2011, with a compounded annual growth rate of 11.5% over the same period, according to the latest research report by Springboard Research, a leading innovator in the IT Market Research industry.
Per Springboard’s report titled “IT in the Insurance Industry: Emerging Trends and Market Opportunities in Asia Pacific,” insurance industries in China and India represent the highest growth potential in the region. Australia leads the market with a 30% share, and combined with the other top five regional market leaders – China, Korea, India and Taiwan – represents an overwhelming 86% of the regional market opportunity in the insurance vertical.
“After having relied on traditional ways of doing business for so long, insurance companies across the region are now embracing IT in a big way and are looking for new ways to reach out to their customers,” said Nilotpal Chakravarti, Senior Analyst of Vertical Markets at Springboard Research. “This focus on new market opportunities – given the pivotal role technology plays in these strategies – is one of the key drivers for IT spending by the Asia Pacific insurance industry,” Mr. Chakravarti explained.
IT Spending Trends
Springboard’s latest report further showed that in terms of overall spending, industry-specific solutions dominate the IT budgets of insurance companies, and include applications for claims management, policy administration, underwriting and sales. Additionally, sales remain APAC insurers’ top strategic focus area and accordingly, CRM is slated to be an important focus area for IT investments in the coming year.
The key IT spending trends prevailing in APAC’s insurance sector are: a growing focus on the web, development of in-house solutions, adoption of SOA and investments in telecom and networking – particularly in voice and video over IP solutions to cut down communication costs.
“Industry-specific solutions are the main focus of IT deployments by insurance companies in the region,” Mr. Chakravarti added. “While developed markets such as Australia, Singapore, Hong Kong and Korea have been spending more on services; in developing, fast-growth markets like China and India, a hardware build-out is still taking place to develop the base infrastructure for many insurance companies.”
Vendor Uptake
A survey of CIOs and IT managers from APAC’s insurance industry quoted in the report reveals that a significant percentage of insurance companies consider local vendors as their primary external influencers for their IT investments. 35% of survey respondents stated they had set up their IT systems in-house. Additionally, 31% of respondents relied on local IT vendors for their IT infrastructure, while 24% implemented solutions from large MNC vendors.
“Local IT vendors in particular have a sizeable foothold in the insurance segment as they provide low-cost, industry-specific solutions, and their applications are customized with specific geographic reference points,” said Mr. Chakravarti. “Springboard is of the opinion that IT vendors with a good understanding of the insurance business, a strong local service delivery capability, and an ability to deliver fast ROI will find more takers among the region’s insurance companies.”
According to the report’s survey respondents, some of the names among the many leading local providers in the Insurance industry in Asia are eBaoTech (China), FirstApex (Singapore) and Mastek (India). Similarly, the leading MNC vendors named by the survey respondents include IBM, HP, Microsoft, Oracle, SAP and CSC.
Springboard Research
