The research by Barnett Waddingham shows that three in five life insurers plan to spend more, with almost a third expecting to pay the same, and just one-tenth set to spend less.
This is thought to be in response to a number of structural challenges facing the industry, such as managing legacy products on inefficient IT systems and tight regulatory oversight.
“To overcome these challenges, the industry has become more dependent upon external consultants in recent years,” Barnett Waddingham partner, Scott Eason, said.
“Actuarial consultants are being brought in to do the heavy lifting and provide expert input on the projects that proliferate across technology, product and risk areas.”
The research involved a survey of 100 leading figures across 45 life insurance companies, finding that 54% are changing or have changed actuarial consultants recently.
Although risk management should remain almost unchanged in terms of firms’ overall proportion of spending, it was found that other technical areas could see a surge in demand.
The survey found that data management and analytics skills are expected to rise rapidly to the second most in demand areas for insurance companies over the next three years.
Cost saving was cited as the number one reason for companies engaging with consultants, with 63% of the respondents ranking cost as the highest-ranking indicator of value.
However, Eason said that the findings indicate there may be inherent weaknesses in the procurement process that prevent insurers seeking the best outcomes.
“An increased focus on cost and brand is deflecting the search away from factors based on skills, delivery, cultural fit, location and experience of the client or the sector,” he said.
“This is likely to deliver poor value for the insurance company – the search for value for money must be balanced with the need for best fit and a focus on cost may be preventing this.”