For life/annuity/benefits insurers, the focus for 2024 is digital experience for agents and customers and leveraging new systems and technologies to create efficiencies in core business functions and speed to market. Pandemic-related lockdowns in 2020 and 2021 required many life carriers to expunge the last physical handoffs and wet signatures from their sales cycles. With digital sales capabilities established, those insurers are looking to understand what customers want from digital experiences so that can create digital presences that meet those needs.
At the same time, insurers are moving into 2024 with level funding from 2023. Given that talent expenses increase over time, those IT budgets buy relatively less in 2024 than they did last year. That creates crunches for insurer CIOs, who are supporting the same strategic initiatives as in prior years. That in turn means that life carrier IT functions are looking to use technology to create efficiencies to save on costs.
That means that for life insurers in 2024, the two watchwords are engagement and efficiency.
Datos Insights recently released our Life/Annuity/Benefits Insurer IT Budgets and Projects report for 2024. The study focuses on insurer IT spending, staffing levels, system capability self-assessments, and planned technology investments and business priorities for the 2024 fiscal year. Some key highlights from this year’s study include:
- Core system replacement remains a priority. Roughly half of insurers are planning core replacement or enhancement activity for 2024, creating the foundation of modern digital capabilities. Top priorities include new product launch, speed to market, and distributor support.
- Distribution is a key focus Distributor ease of doing business has increased significantly as a priority for L/A/B insurers, reflecting a business environment where life carriers no longer have full control over their distribution networks and must compete to be attractive to agents and customers. Life insurer digital capabilities in 2024 are about delivering capabilities to buyers when they want them, whenever they need them.
- Insurers are beginning to utilize generative AI. Interest in large language models is fairly substantial and looking to rise. Roughly 20% of life carriers are currently using a large language model, and another 20% plan to pilot one this year. For most insurers, these early experiments will focus on lower risk tasks, finding efficiencies in everyday business processes. IT’s role is to provide best practices—for example, so that employees understand not to divulge proprietary information while they’re playing with ChatGPT.
Insurers are moving into 2024 carefully, holding steady with budget and staff levels, looking to achieve savings where they can, and remaining aligned with strategic transformation and system replacement commitments. Their 2024 planning has been difficult, reflecting both some of the economic uncertainty that defined 2023, as well as the realities of remaining committed to ambitious project portfolios with level staffing and funding.
The Datos Insights Insurer IT Budgets and Projects report is designed to help insurers understand peer behavior, budgets, and priorities for the coming year as context for their strategic planning activities. Solution providers can use this report to identify insurers’ needs and specific areas that require investment, revealing insights that can guide development roadmaps or market positioning. Visit our website to download the full report.
