Canadian Underwriter

Insurer IT spending up marginally in 2004, says consultant

January 13, 2004   by Canadian Underwriter

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U.S. general insurers will spend slightly more on information technology (IT) in 2004, but funding will be limited and focused, says research and consulting firm TowerGroup.
In its annual forecast, the consultant says the industry faces similar challenges to the life and annuity business in terms of using technology for customer service, distribution and operational efficiency.
Among the strategies insurers need to look at are how to increase agent sales revenue, to create a single views of the customer, and leveraging data.
As well, insurers need to have a real strategy for dealing with legacy systems, asking whether to reengineer, replace or keep the status quo. Outsourcing assessments need to be conducted to determine the right blend of in-house versus outsourced processes.
Technology will also be viewed in terms of the need to comply with new regulations, specifically the reporting/disclosure requirements of Sarbanes-Oxley and the USA Patriot Act.
The blackout of 2003 was a strong reminder of the need for thorough business continuity plans, and TowerGroup expects this area to see increased attention in 2004.
“To help reach their 2004 objectives relative to growth, cost containment and risk management, insurers will place significant emphasis on leveraging existing technology investments,” says Deborah Smallwood, insurance practice leader at TowerGroup. “IT spending will slightly increase compared to 2003, but those new dollars will be limited and carefully directed.

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