The economic climate has changed how insurance companies view technology investments. Indeed, carriers today are planning incremental improvements in business efficiency and IT operations-a strategy that may be appropriate in the near term but is too conservative for the future.The assessment comes from Giga Research based on a recent survey it conducted with insurance CIOs (see "CIOs Getting Down to Business," page 1).

The majority of carriers Giga surveyed are planning to spend most of their IT budgets on existing infrastructure, rather than invest in new initiatives.

The report also concludes that although some carriers are significantly increasing their spending on systems integration and consulting services, most carriers are cutting spending in these areas, and overall spending on IT consulting is expected to be lower in 2003 than in the prior year.

IT spending should pick up during the second half of 2003, according to Giga Research, a wholly owned subsidiary of Forrester Research Inc., Cambridge, Mass.

The research firm attributes the upturn in spending to the fact that insurance companies will be prepared to implement new projects after months of planning and testing.

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