NU Online News Service
The insurance industry should see higher informationtechnology budgets next year as more midsize property and casualty insurers say they anticipate increasing their 2011 information technology spending plans, according to a recently released study from Novarica.
The technology consulting firm’s report, “U.S. Insurers’ IT Budgets and Projects for 2011,” notes that carrier information technology budgets are “poised to increase modestly” across most classes of insurers in both the p&c and life and health industries.
For p&c carriers, the report states that in April, most large insurers predicted they would have higher or level information technology budgets in 2011. Novarica’s recent report, based on a survey of 122 insurance chief information officers and senior executives polled in November, shows large insurers sticking to those plans.
In the recent survey, 51 percent of large p&c insurers—defined as having more than $1 billion in premium—said they would have slightly or much higher information technology budgets compared to 2010. Thirty-eight percent said the budget would be level, while 10 percent said slightly or much lower.
For midsize p&c insurers—those with premium between $100 million and $1 billion—a greater number of carriers now predict information technology budget increases compared to Novarica’s April survey.
The report says, “Midsize [p&c] companies showed a bit more caution about 2011 projections in the middle of the year, but more than 2/3 of the current group sees increasing budgets [as of November].”
Fifty-six percent of midsize carriers said they plan on having a slightly higher information technology budget than 2010, and another 12 percent said they plan to have a much higher budget. Nineteen percent said their information technology budget would remain flat, and 16 percent said slightly or much lower.
For small p&c insurers—premium under $100 million—Novarica said it did not have significant participation in April, but the current surveyed group is “the most split of any size/sector grouping, with approximately half expecting modest increases and half expecting modest decreases” in information technology budgets.
Forty-four percent of small insurers plan to have a slightly higher information technology budget in 2011, according to the recent survey, and an equal percentage plan to have a slightly lower budget. Thirteen percent plan to have a much higher budget, while 6 percent see a level budget and 3 percent a much lower budget.
All sizes of p&c insurers rated growth strategies as the biggest driver of their 2011 information technology strategies. Growth strategies beat out drivers such as expense reduction issues, competitive parity, the recession and compliance pressures.
Regarding top projects for 2011, policy administration received by far the most percentage of responses among all p&c insurer sizes. This, Novarica said, is in line with projections in April.
The report is authored by Matthew Josefowicz, director of Novarica’s insurance practice. The firm said it will hold a webinar discussion on the report Monday, Jan. 10 at 12 p.m. EST.