Australian insurers are likely to spend more than $5.2 billion on IT services and products in the next financial year.

The latest forecast by research firm Gartner shows telecommunications will be one of the biggest spending categories for insurers, reaching $1.5 billion. Software expenditure is expected to grow the fastest next year – up 9.2%.

Principal Research Analyst Derry Finkeldey says insurance companies are increasingly being presented with opportunities to transform their operations through new technologies and customer distribution models.

“These operational areas can benefit from applications based in the cloud and context-aware computing, social and mobile technology,” she said.

“External factors such as regulatory change, uncertain economic conditions and the increasing frequency of catastrophic events are forcing insurers to reassess their approaches to business processes and the IT applications that enable them to derive greater efficiency and achieve more with less.”