U.S. P&C insurers plan to increase IT spending in 2008-09, but by 6.2% less than they did in 2007-08

U.S. property and casualty insurers plan to increase IT spending by 1.6% from 2008 to 2009, according to the fourth annual joint Information Technology (IT) spending survey conducted by Gartner, an IT research and advisory company, and the Property Casualty Insurers Association of America (PCI).
This increase is very close to the 1.9% planned spending increase that Gartner forecast for 2008-09.
Nevertheless, the figure is down sharply from the 8.1% planned increase from 2007 to 2008.
Based on the data collected, the planned increase in spending from 2009 to 2010 will only be around 0.2%. This slight increase is expected despite the fact that companies are on average predicting a decrease in revenue of 3.7% from 2008 to 2009.
“This study is the most comprehensive IT expense statistics study in the property and casualty industry,” said Scott Joyner, vice president of information technology at PCI. “The 22 PCI member companies that participate in the study averaged US$400 million in revenue and 474 employees.”
The surveyed companies said that in 2008, 59% of their IT spending was dedicated to “lights-on” support. The remainder of their IT investments were dedicated to support business growth and transformation. 
“This pattern of holding steady from 2008 indicates that even with a tough economy, these companies are still making some investment in the future,” said Eric Stegman, research director of Gartner.
According to Stephen Forte, a research director with Gartner’s insurance industry advisory service: “With IT costs per policy and claim at US$69 and US$58 respectively, this validates the trend of property and casualty insurers replacing core legacy administration systems for among numerous reasons, reducing costs.
“Obtaining measurable business outcomes remains a key initiative even during the current economic malaise.”