The pace of core application replacement and modernization in the U.S. insurance market continues as the top IT budget item in 2009. Even with the losses from investments and underwriting performance, and declines in written premiums and policyholder surplus, insurers recognize that future business performance is inextricably linked to transitioning IT costs from just running the business to changing the business. That’s not a surprise, given how tightly coupled the business of insurance is with this business technology.

At the same time, U.S. insurers are looking to move shoppers and policyholders online for both policy sales and claims self-service to both improve the customer experience while wringing more costs out of these business processes. Indeed, questions about core applications and customer experience topped the questions that insurers around the world posed to Forrester in 2008.

In its just-in Global Enterprise and SMB IT Budget and Spending Survey, Forrester Research questioned 61 IT decision-makers at U.S. insurance companies about the big themes their IT departments would be tackling this year. Topping the list was replacing both core applications and the capital-intensive underlying server infrastructure. What’s notable is that while these two replacement projects also led at 45% of respondents for all other U.S. industries, a whopping 60% of insurers said these were their big IT themes for this year.

Also not a surprise on the tech shopping lists for insurers is Internet and eCommerce technology along with more robust security technology to protect customer and corporate data to preserve consumer trust. Low on the list of tech priorities for insurers this year, however, were collaboration and network and telecommunications spending for mobility and convergence. 

Ellen Carney is a senior analyst with Forrester Research. She focuses on how the financial services industry researches, procures and deploys business technology, and is responsible for developing the global forecasts for IT budget and spending forecasts for insurance and banking. She can be reached at
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