Despite the hype around new areas like mobile, social media, and cloud, the story of insurer IT budgets and projects for 2012 is one of continuity. Insurers are investing, through replacements and enhancements, in delivering the business capabilities needed to support growth, achieve competitive parity and improve operational effectiveness. But most insurers still think of IT as a self-contained area. And few have truly integrated it into operational planning in the way that companies will need to as the broad changes in information technology sweeping through the economy start to drive change in the basic assumptions of the insurance industry.

Insurer CIOs have a clear-eyed self-assessment of the state of their IT capabilities. In a recent Novarica survey of 132 insurer CIOs, insurers rated nearly half of their systems below the level of "acceptable" on average. While insurers are confident in their IT security capabilities and undifferentiated systems such as financials, most core systems were rated just barely acceptable and customer-focused systems such as portals and customer relationship management (CRM), were rated between poor and acceptable on average.

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