French Insurers Look to Boost Profits

CIOs at French insurance companies are operating under tighter budget constraints than their American and U.K. counterparts, a new report from Celent finds.

The report, “Insurance in France 2011: The CIO Perspective,” found that in 2011 a French general insurer will spend on average a bit more than 3% of premium on IT, and a life insurer will spend 2%, less than U.S. and UK insurers.

“Even though French insurance companies are currently working on improving their profitability (notably through cost cutting), they do not believe that cost reduction alone is a sufficient argument to increase IT operation and core process outsourcing.” Says Nicolas Michellod, senior analyst with Celent's Insurance Group and coauthor of the report. “The time when insurers were looking essentially for growth with cheap products to attract the mass market, and relying on investment profits to offset their poor combined ratio, is over. French insurers will try to find room for more collaboration with each other in the near future, aiming at finding synergies and cost saving opportunities in core operations.”

The report notes that another possible driver of IT spending is the forthcoming Solvency II regulations in the European Union. “With regard to Solvency II, French insurers are not less prepared than their European peers,” the report states. “However, we have noticed that French insurers tend to have more criticism to express about Solvency II compared to firms in other European countries.”