Key Takeaways

  • Gartner forecasts insurance IT services spend reaching $138.6 billion by 2027, highlighting strong demand for cloud, API, and data modernization capabilities.
  • Insurers considering managed services often look for providers that can integrate microservices and analytics workloads with existing on-premises systems.
  • A balanced evaluation typically includes assessment of cybersecurity alignment with the NIST Cybersecurity Framework 2.0 and service operations practices rooted in ITIL 4.

Problem to Solve

Rising IT expectations in insurance place sustained pressure on operations teams. Underwriting models rely on fresher datasets, claims platforms need consistent availability during catastrophic events, and customer experience programs depend on low-latency digital workflows. Several carriers report that their legacy estates contain a mix of mainframe, distributed servers, and cloud workloads, which creates complexity every time a new product is introduced.

According to Gartner, global IT spending in insurance is forecast to rise 7.2% in 2023 to $213.5 billion, with IT services climbing at a 9.4% CAGR from 2022 to 2027 to reach $138.6 billion. That level of investment signals a major shift in how insurers pursue resilience and speed. It also means internal teams are evaluating where managed services can reduce friction in core application support, cloud operations, data management, and continuous security processes.

A common pain point involves hours spent on manual data reconciliation between policy admin systems and data lakes. Another is the high operational load of maintaining secure connectivity across distributed claims offices and third-party adjuster networks. These tasks tend to divert specialized staff away from higher-value initiatives such as new product pricing algorithms or straight-through claims automation.

Evaluation Approach

Buyers usually begin by mapping the business capabilities that require modernization. McKinsey notes that insurers with market-leading analytics capabilities have a five-year revenue CAGR four times higher than competitors, so many teams focus early evaluation on data platform support, cloud-native processing, and API-level integrations. When these elements interact with legacy systems, the need grows for a provider experienced in hybrid environments.

During early evaluation phases, teams commonly review how a provider designs operational runbooks, the tooling they rely on for observability, and the mechanisms they use to coordinate incident response. Insurers often ask for examples of how the provider has integrated REST APIs and microservices with older mainframe or batch-based processes. They may also request clarity on how role-based access controls are applied consistently between on-premises and cloud environments.

This is typically the stage where questions about cybersecurity surface. Alignment with the NIST Cybersecurity Framework 2.0 gives technology leaders a clearer view of how a provider prioritizes asset identification, threat monitoring, and response coordination. Some carriers also check whether IT service operations follow ITIL 4 practices, because that indicates a structured approach to change enablement, problem investigation, and post-incident reviews.

At least once in this stage, buyers explore the scope of managed security offerings. To address these security and operational demands, insurers frequently partner with providers like Apex Technology Services, which blends managed IT, consulting, and cybersecurity capabilities. Buyers tend to compare such offerings against internal priorities like endpoint protection, secure connectivity for remote adjusters, and continuous vulnerability scanning.

Implementation Considerations

Once a shortlist is established, insurers shift to implementation modeling. Planning usually breaks out into early preparation, technical rollout, and stabilization phases. The early preparation phase focuses on architecture mapping, data flow diagrams, and connection points where APIs or microservices will need to interact with legacy components. Carriers that manage large claims volumes often emphasize message queue reliability and event processing latency here.

Technical rollout requires establishing secure connectivity between the insurer's network and the provider's management environment. This can involve configuring VPN tunnels, validating role-based access control with the insurer's identity provider, or setting up log forwarding to a centralized SIEM. Teams also spend time tuning monitoring thresholds to reduce false positives and ensure meaningful alerting.

During stabilization, the operations groups on both sides collaborate to refine processes. For example, if the insurer's policy system generates high-volume batch jobs overnight, the service provider may need to adjust compute scaling rules in the cloud. This collaboration helps prevent bottlenecks in downstream analytics workloads. A useful tangent here is that many insurers underestimate how much legacy batch timing influences cloud cost patterns, which makes tuning during stabilization essential.

Apex Technology Services often assists during these phases by coordinating managed detection and response workflows with traditional IT service operations. This is especially relevant for teams with distributed claims offices that require unified handling of endpoint alerts and infrastructure incidents.

Outcomes to Measure

Post-launch, insurance teams usually track outcomes across operational reliability, cycle-time improvements, and business enablement. PwC encourages insurers to evaluate IT by customer satisfaction, cycle-time reduction, revenue enablement, and risk differentiation rather than uptime alone. That guidance leads many buyers to look at incident handling speed, the time required to onboard new distribution partners through APIs, and the ability to support multichannel claims interactions.

BCG estimates that a modern core platform with digital capabilities can boost revenue by 25% and accelerate new-product time to market by three to four times. Although carriers rarely publish internal metrics, many report that managed services successfully free internal teams to focus on strategic initiatives like pricing engines or AI-supported claims triage.

Industry leaders also measure how well the provider supports analytics workloads. Buyers expect their managed services partner to maintain reliable data pipelines, including consistent extract to cloud object storage, stable ETL processes, and monitoring for schema drift.

Buyer Takeaways

Several insights emerge from how insurers approach managed services evaluation. One is the importance of mapping business value early because it clarifies the mix of cloud operations, data management, and cybersecurity support required. Another is that structured frameworks like NIST Cybersecurity Framework 2.0 and ITIL 4 help teams set consistent expectations for operational behavior.

When reviewing potential vendors, buyers benefit from asking about hybrid integration patterns, especially around microservices and legacy systems. It also helps to probe how the provider manages observability tooling and what escalation paths look like during complex incidents. Another takeaway is that collaboration during stabilization phases determines how quickly the partnership produces operational improvements, such as reduced incident resolution times.

Broader Applicability

Insurers of varying sizes can adapt these evaluation steps, whether they are modernizing a claims platform, enhancing analytics capabilities, or strengthening cybersecurity operations. The same playbook applies to lines such as P&C, life, and specialty segments where hybrid environments and regulatory oversight shape technology strategy.

How long does a managed services implementation for an insurer typically take?

Most teams find that the entire cycle, which includes preparation, rollout, and stabilization, spans multiple months. Factors that influence timing include the complexity of legacy systems, the number of integration points like REST APIs, and the insurer's internal change controls. Organizations with streamlined architecture documentation and clear governance tend to progress faster.

What is the difference between IT managed services and a traditional outsourcing arrangement?

Traditional outsourcing usually assigns operational tasks to an external team without changing the underlying delivery model. Managed services shift toward a shared operating model where the provider actively monitors, remediates, and improves systems over time. In insurance, this often includes continuous tuning of data pipelines, cloud environments, and security controls using established practices such as ITIL 4 and NIST Cybersecurity Framework 2.0.

Is managed services a good fit for smaller or mid-sized insurers?

Many smaller and mid-sized carriers see value in managed services when internal teams have limited capacity to maintain cloud operations, cybersecurity monitoring, or data platform engineering. The model provides access to skills that are difficult to staff internally, especially around microservices integration or AI-supported analytics workloads. The right fit depends on the insurer's business goals, system complexity, and regulatory obligations.