Chicago – It’s not just an ocean separating American insurers from their cohorts in Europe. New research from Boston-based Celent LLC, a division of New York-based Oliver Wyman, notes similar yet divergent challenges and opportunities facing insurance CIOs and CTOs on each side of the Atlantic.
According to the survey, in the United States, maintaining growth in a softer, more uncertain market by investing in new business and underwriting solutions along with upgrading other core systems, is the top priority. Celent’s study asked 28 participants–mostly CIOs and CTOs from U.S. insurers with annual premiums over US$100 million–about their IT investment plans in 2008.
“Growth continues to be an imperative, but growth in a soft market can mean growing relative to competitors,” notes the study, which was authored by Senior Analyst Donald Light and Director of Insurance Craig Weber.
A second priority was controlling expenses by continuing to migrate to a more modern infrastructure, especially service-oriented architecture. The study finds that irrespective of size and industry segment, 75% to 80% of the respondents consider SOA to be a critical element of how they develop and integrate applications. The study also records the ongoing trend among large and midsize insurers to shift functionality from mainframe operating systems onto other platforms such as Windows and, to some degree, Linux.
Lastly, the U.S. study says another pressing concern among respondents was how to support major initiative build versus buy decisions with a solid business rationale.
A similar need to support core system replacement projects with a solid business rationale exists in Europe. The European study, authored by Catherine Stagg-Macey, finds the foremost challenge facing continental insurance CIOs in 2008 is streamlining internal operations and improving the customer/broker experience by investing in new business solutions and upgrading core systems. “Given the correlation between service levels and an optimized internal operation, it is not surprising to see a continued focus on streamlining operations,” the study says, noting that many companies are constrained by legacy core systems.
Like their American counterparts, the 15 respondents (culled from European insurers with annual premiums over US$100 million) will continue to invest in Web services and SOA to improve integration efforts especially, in the areas of new business.
Source: Celent LLC
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