Insurers face 13.8% IT surge as legacy systems drag

Property and casualty carriers are also projected to post a 12.9% rise this year.

The insurance industry will likely have the largest increase in information technology (IT) budget spending this year, as financial institutions are entering 2026 with competing technology priorities.

The biggest expected IT budget rises are expected to surge by 13.8% in life and health insurance and 12.9% in property and casualty insurance, according to Celent, a GlobalData company.

These figures are significantly higher than the financial industry average of 7%.

Analysts at Celent attribute this surge to a shift from small-scale experiments to full implementation of new tools. 

Insurers are now focusing on generative AI, automated risk monitoring, and replacing ageing "legacy" computer systems that have slowed operations in the past.

The aggressive spending in the insurance space stands in contrast to other financial sectors. 

Banks are facing tighter margins, with corporate banking IT budgets expected to grow by only 5.8%. 

Much of the spending for banks is currently tied up in mandatory regulatory requirements and basic maintenance, leaving less room for new innovation.

The capital markets see the lowest growth, with "buy-side" firms projecting a budget increase of just 3.7%.

According to Tom Scales, a principal analyst at Celent, the increased spending is a necessary move for insurers to remain competitive. 

He noted that whilst budgets are rising, the pressure to choose the right technology is also increasing, as firms aim to turn these investments into real operational improvements.

The findings are based on a survey of more than 1,000 executives across the global financial services industry.