Asia-Pac insurance technology growth expected to

dwarf pedestrian Europe

By Jonathan Swift

Asia Pacific insurers will increase technology spending by 8% to $18.2bn in 2013, according to a new report.

IDC Financial Insights claims that this would mean that the region boasts the most aggressive year-on-year technology spending, buoyed by countries in emerging Asia, such as China, India, Indonesia and Malaysia.

In comparison, aggregated global IT investments for insurers will rise 3.1% year-on-year in 2013 to an estimated $110.7bn.

For the other two regions, IDC said that the European countries continue to command the biggest slice of the IT investment pie at 40.5% of global spending even on a pedestrian 1.7% growth, while North American insurers are expected to account for 37.3% of global spending on a muted 2% year-on-year growth.

"With increased volatility and complexity, the markets have fundamentally changed, and one cannot expect the future to resemble the recent past," said Li-May Chew, CFA, associate research director for IDC Financial Insights' Worldwide Insurance Advisory Service.

"Businesses might be hard pressed to return to the normal 'business as usual' mode, and as a result, insurers will have to react by responding more quickly to opportunities and threats, and by making efforts to identify trends and anticipate future changes.

"On the macro front, we see the faltering global expansion and low interest rate environment reducing investment yields and undermining profitability.

"This is driving international insurers to expand into emerging Asia and Latin America to support profitable growth and revisit alternative revenue streams from speciality lines such as micro-insurance and takaful insurance.

"There will also be more concerted efforts around online modes such as the internet, with forays into social media and mobile initiatives."