This year, the U.S. insurance industry will spend an estimated $6.3 billion on new information technology projects. Of that amount, the industry could save $250 million or 23% of the $1.45 billion portion it spends on staff and consultants to integrate internal and external information technology systems.The magic bullet to these dramatic savings is ACORD XML, according to a report by Boston-based Celent Communications Inc. Carriers surveyed by Celent either expected to or had actually achieved integration efficiencies of 20% to 30% when using ACORD XML standards. A few reported efficiencies on some projects of as much as 80%.
Overall, a 20% to 30% reduction in system integration costs would reduce IT integration expenditures from 23% of new-project budgets to between 15% to 20%. If embraced by the entire U.S. insurance industry, the savings would reach an estimated $250 million annually, according to Celent, a research and advisory firm for financial institutions.
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