Where's the 2023 smart money going for digital transformation? (Research preview)

December 13, 2022 2:59 PM

Was it fun while it lasted, or is the real fun just beginning? That's the question on the insurance industry's mind as it enters 2023.

Few in the industry predict any sort of reduction in digital spending next year (though year over year increases may not be as high as they were in the past). But insurance digital transformation will look different next year than it has over the past few, respondents to a Digital Insurance/Arizent survey say. However, insurers are still focused on digitally transforming the sector, and working with insurtechs on delivering valuable solutions to customers.

The full survey report will be out in January. But in this preview, you can find some of the more interesting data points. What do insurers fear more: recession or inflation? And are insurers likely to change their digital plans if conditions worsen? How much will insurtech investment fall? Read on to see, and keep an eye out for our full research brief after the New Year.

Survey respondents clearly see the economy as the biggest near-term threat to the industry. Whether inflation or a recession, the macroeconomic environment seems poised to influence digital strategy choices in 2023. Typical roadblocks, like 2021's much-discussed talent challenge, are on the back burner right now.

While there is some fungibility, most insurance digital budgets are likely to stay where they are despite the economic conditions, respondents say. Interestingly, there are some carriers and agencies who would be willing to spend more on digital if conditions worsen.

It's in the insurtech investment space where the economy seems most uncertain. Most respondents don't expect much of a drop from next year to this year — but this year was significantly lower than 2021. While insurers and agencies tend to see water reaching its level, insurtechs themselves are more pessimistic, with twice as many expecting a tougher investment environment for new companies next year than this one.

But where the rubber meets the road, digital transformation is still a major priority for insurers. Customers demanding new avenues of interaction are driving changes in the insurance business model. All stakeholders expect that goal to remain in sight throughout 2023.