IT spending by Indonesian insurance companies will grow at a rapid pace in line with the industry's requirements. From US$176 million in 2010, the IT investment for the Indonesian insurance market is forecast to increase to US$640 million in 2015, or a compound annual growth rate (CAGR) of 29.5% during the period.

Research and consulting firm Celent notes in a report that Indonesia's insurance market has been growing swiftly during the past decade and is expected to continue this momentum for the next decade. The insurance penetration rate is considerably low compared to other Asian countries, although Indonesia boasts of a huge population.

Celent estimates that IT spending for the life insurance sector will grow to US$441 million in 2015 from US$118 million in 2010, while that for property and casualty (P&C)) will increase to US$199 million from US$58 million during the same period.

In terms of system, investments by life insurance companies in the internet will rise in 2015, accounting for 10.2% of the total IT spending. It will become a crucial component of the IT spending for insurers due to the increased requirements of the internet including mobile.

Investment in customer relationship management (CRM) will likewise go up from 9.5% in 2012 to 10.9% in 2015. CRM has been a hot topic recently for all financial institutions and Indonesian insurance companies are no exception. Celent says insurers should consider enhancing a CRM function to keep growing their business.

The call centre is one of the important investments for Indonesian insurers. Due to the increase of direct insurance, Celent says more call centres are required to satisfy customers and these will become more important in boosting direct insurance.

One of the key distribution channels in Indonesia is bancassurance and the investment for branches/agents will continue to grow steadily - from 15.5% of the total spending in 2012 to 15.9% in 2015.

Celent also sees the change in the portions of IT investments for the P&C insurance market. In line with the life insurance sector, P&C investment in the Internet will increase from 7.4% in 2012 to 12.6% in 2015. Call centre spending is also expected to rise from 7.4% in 2012 to 11.1% in 2015, while that for CRM will grow from 8,4% to 9.5% during the same period.