While the effects of the March earthquake are still being felt,
The earthquake has also spurred insurers to narrow in on IT spending. According to Celent’s new report, “IT Spending Trends in the Japanese Insurance Industry: 2011,” IT spending in Japan’s insurance industry has been trending sideways since before the disaster, making it difficult to conclude that there will be additional cutbacks.
Celent projects that Japan’s insurance industry’s IT spending will reach $7.95 billion for the fiscal year ended March 2011, declining marginally the following year but rebounding to reach $7.98 billion in the fiscal year ending March 2015. This translates into a CAGR of 0.38 percent, in other words a roughly flat trend projected to run from the fiscal year ended March 2010 through fiscal year ending March 2015. For the fiscal year ended March 2010 life insurance accounts for $5.02 billion, or 64.1 percent. Over the same period property/casualty insurance IT spending was responsible for $2.82 billion, or 35.9 percent, of the total.
The March disaster is seen restraining IT investment spending in Japan’s insurance industry and sending it slightly lower in the fiscal year ending March 2012, after which it is seen charting a moderate recovery, according to the report. However, once initiatives such as replacements of core systems at major insurance firms are completed, it is difficult to expect significant growth. Celent forecasts that the IT spending for the property/casualty insurance industry, as with the life insurance industry, will see roughly half, or approximately 48.7 percent, of IT spending allocated to investments in core systems.
The disaster has thrust new IT projects onto the agenda at many companies. In recent years, green technologies and mobile devices have been increasingly gathering attention. Celent predicts this trend will become more pronounced following the disaster. Smartphones, tablets and other mobile devices have found a broad following among the general public, and insurers have moved to respond. In addition, in the immediate aftermath of the earthquake, areas that insurance companies are tackling with the most vigor are business continuity planning and green technology, according to Celent.
