Perhaps reports of the slowly improving economy have bolstered insurers' spirits and helped to green light IT projects that might otherwise have been tabled for next year. According to a joint report issued by
Data from the fifth annual "Information Technology Spending Survey" shows that the planned IT spending increase from 2009 to 2010 is 7.4%. This figure is much higher than 0.2% increase survey respondents had planned for last year, but falls in line with a projected revenue increase of 5.3%. The planned spending increase is a dramatic departure from the 1.6% decrease from 2008 to 2009.
Additionally, the report finds that the planned increase in spending from 2010 to 2011 will only be around 3.4%.
“The 21 PCI member companies that participate in the study averaged $639 million in revenue and 511 employees,” notes Scott Joyner, VP, information technology for PCI.
Insurers indicated that for 2010, 63% of IT spending is dedicated to “lights-on” support, while the remainder of the IT investments are dedicated to support business growth and transformation. That figure is a slight increase from 59% in 2009, which Gartner Research Director Eric Stegman indicated may have been due to delayed maintenance.
“P&C insurers are still struggling with reducing operational costs and justifying the replacement of aging legacy systems," says Kimberly Harris-Ferrante, VP and distinguished analyst with Gartner’s Insurance Industry Advisory Service. "With rising costs of maintenance, it is imperative that companies begin a more aggressive approach to legacy replacement in order to shift IT spending to more strategic projects that will promote business growth and transformation.”
