The ASP OptionOutsourcing IT projects to application service providers is one waythat insurance companies are reducing their technology expenses. In thisissue's cover story, two technology firms-HNC Insurance Solutions Inc. andAlta Analytics-recently began offering their fraud detection software on anoutsourcing basis.

An application service provider enables a company to use the latesttechnology without the cost of implementing new systems. For that reason,experts say that small and midsize companies are the most likely toconsider the ASP option.

Insurance companies spent $5.6 billion on technology outsourcing in1999, according to TowerGroup, a Needham, Mass.-based technology consultingand research firm. That figure is expected to increase to $7.45 billion by2002, and will surpass internal technology spending, which is expected to total $6.35 billion by 2002, according to TowerGroup statistics.

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