Seattle — U.S. P&C insurers are actively undertaking replacements and enhancements to their policy administration systems, according to a new survey published by New York-based research and advisory firm Novarica, in association with the Insurance Accounting & Systems Association Inc. (IASA), Durham, N.C., at the association’s 2008 Annual Educational Conference & Business Show in Seattle.
The 20-page report, “Budgets, Benchmarks, and Business Priorities for Insurer CIOs 2008: US Property/Casualty Edition,” is based on a survey of 35 U.S. property/casualty insurers. A companion life/annuity volume is planned for later this summer.
“Insurers have realized the strategic importance of technology, and continue to invest a steady portion of their income into maintaining and improving their capabilities,” says Matthew Josefowicz, director of the insurance practice at Novarica and the author of the report. “One picture that does emerge from the results is the very real shift in resources from addressing the major the challenges of the past to those of the present, and a clear indication of what the challenges of the future will be. We’re seeing an increased maturity in e-business, a focus today on modernizing core systems, and an expectation that predictive analytics and data will be the challenge of tomorrow.”
Among the key findings of the survey:
• Overall IT budgets are holding steady at 3% of premium. External spending was a little over half of the average budget.
• Agent e-business was the across-the-board winner for systems, delivering the best ROI over the past 18 months.
• 71% of respondents shared five top priorities: policy administration system (PAS) replacement, e-business, PAS enhancement, underwriting or supporting a new line of business.
• Predictive analytics across multiple areas was the most common area insurers reported as “under evaluation.”
• Web 2.0 user-content areas showed up high as “under evaluation,” but with a low incidence of actual projects, while Web 2.0 technologies such as AJAX were actually being implemented by more than one-third of respondents.
The report includes 12 figures analyzing responses in areas including budgets, staff composition, user satisfaction rates and top priorities. It also includes analysis of the priority levels of over 40 distinct insurance technology areas, ranging from agency management system interfaces to Web 2.0.
“Partnering with Novarica to produce this report is a very important part of IASA’s educational work in the insurance industry,” says Joe Pomilia, executive director of IASA. “IASA members are looking for competitive intelligence, information about systems and technologies that are important to their businesses. This report provides quality information that serves the needs of the industry at large and IASA members, and we are very pleased to be a part of this effort with Novarica.”
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