New Delhi: Indian insurance companies will spend $1.8 billion on IT products and services this fiscal, an increase of 11.7% from last year, according to market analyst firm Gartner.
The companies had spent $1.6 billion on the related services in 2010-11.
“External factors such as regulatory changes, uncertain economic conditions and the increasing frequency of catastrophic events are forcing insurers to reassess their approaches to business processes,” Derry Finkeldey, principal analyst at Gartner said in a statement.
She added that IT applications enable them to derive greater efficiency and achieve more with less.
The forecast includes spending by insurers on internal IT (including personnel), hardware, software, external IT services and telecommunications.
Telecommunications represents the biggest spending category, and it is forecast to reach USD 566 million in 2012, up from USD 512 million in 2011.
However, spending on IT services is expected to grow fastest in 2012, with revenue totalling USD 447 million in 2012, up by 15.8 per cent over 2011 revenue of $386 million.
Indian insurers are faced with an opportunity to transform significant aspects of their operations via technology, right across the entire insurance business value chain, the statement said.
“Insurers are looking for ways to streamline their processes from the front office to the back office, and are investing in the next generation of core solutions to help them do that,” Finkeldey said.