With the 2007 business environment for North American insurance carriers looking relatively good for the second year in a row, according to Forrester Research Inc., insurance carriers have become slightly more generous in their IT spending. The Cambridge, Mass.-based research firm anticipates that IT spending in 2007 in the insurance industry will increase by 7%, compared with 5% growth in 2006.Efficiency and innovation will be the highest priorities, and the initiatives to support these priorities are utility-oriented projects such as infrastructure consolidation and disaster recovery. However, competitive pressures and technology-enabled opportunities will drive the need for innovation in Internet and mobile applications as well as the replacement of legacy applications. Underpinning these changes will be a continued drive toward service-oriented architecture (SOA) for internal integration of systems, usage of services firms for transformation, and greater focus on process standardization.

Insurance respondents identified the major drivers for adoption of SOA as the need for business flexibility and application flexibility. Also, according to Forrester, SOA will increase in usage and will focus on internal integration. Eight out of 13 insurance respondents stated they would increase their SOA usage over the next 12 to 24 months, and 10 of these reported it would be used for internal integration.

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