Boston —While plans for IT spending within insurance companies don't change drastically from year to year, there are pressures, priorities and plans that do shift.

A new report, "Insurance CIO/CTO Pressures, Priorities, and Plans in 2008: US Survey Results" from Boston-based Celent LLC takes its fifth annual look at what U.S. insurance company CIOs and CTOs are planning for the new year.

Growth continues to be an imperative, but growth in a soft market can mean growing relative to competitors, according to the report. In last year's survey, the need for growth was one of the most important business priorities influencing IT directions. That remains true this year, but there is a greater awareness of a soft market that might mean growth will have to be achieved by taking market share from competitors.

Getting new business in the door, servicing it efficiently and using a more modern infrastructure is drawing the most IT spend. "IT spend will focus on getting new service in the door and servicing it efficiently using modern architecture," says Donald Light, senior analyst at Celent.

New business may come from independent agents and brokers, or from exclusive agents. Administration of in-force business remains a people-intensive business using complex and costly core systems, which topped the list of IT initiatives, followed by front office solutions and data mastery-the same top three initiatives of 2007.

A surprising IT budget spend, according to Light, is on human capital. Light tells INN that 60% of insurers' IT budget is allocated to staffing.

Another finding from the survey is that Web services and service-oriented architecture (SOA) are widely deployed, especially in the front office. This year's survey reinforces the picture that emerged a year ago. This technology is past the research and pilot phase into production, where it is delivering value.

Insurers are viewing consolidation of software vendors more negatively now than a year ago, according to Light. Concerns include lack of innovation, and not seeking business from smaller carriers.

Insurers are deploying Web 2.0 technologies—from wikis to blogs—for ease of use and communication internally, according to Light. There was some use of the various technologies grouped under the Web 2.0 umbrella. The most frequent deployments were aimed at better Web site usability, and facilitating communication within teams and with external partners.

Source: Celent LLC

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