Celent estimates that, globally, insurance IT spending will grow to US$184.9 billion in 2016, with continued growth to US$208.1 in 2018 — a CAGR of 6.1%. This upward shift is above last year’s estimates and is the result of increased premiums in most regions and efforts to keep competitive in a digital market.

In the report IT Spending in Insurance: A Global Perspective, 2016, Celent analyzes IT spending trends across North America, Europe, Asia-Pacific, and Latin America. The report compares and contrasts the direction of IT spending trends. The growth is spread across the regions at various levels, with North America and Latin America seeing the highest growth rates.

European and North American financial institutions currently account for 74.6% of global IT investments by insurance companies. Firms in the Asia-Pacific region account for 18.7%, Latin America accounts for 4%, and the Middle East / Africa / Commonwealth of Independent States account for the balance.

“As with 2015, IT investment continues to be targeted towards profitable growth, with IT investment continuing to rise,” says Jamie Macgregor, senior vice president of Celent’s insurance practice and coauthor of the report. “However, unlike last year, there is leveling off of expenditure in some territories owing to the perceived fragility of the macroeconomic environment.”

“Life insurers are harder hit,” says Karen Monks, an analyst with Celent’s insurance practice and coauthor of the report. “Low interest rates in developed markets continue to take their toll. Bright spots remain with the continued investment in digital across both P&C and Life, and core systems transformation to drive improved market responsiveness.”